REIT Stock Splits and Liquidity Changes

Posted: 8 Oct 2011

See all articles by Gow-Cheng Huang

Gow-Cheng Huang

Alabama State University - Department of Accounting and Finance

Kartono Liano

Mississippi State University - Department of Finance and Economics

Ming-Shiun Pan

Shippensburg University - Department of Finance and Management Information & Analysis

Date Written: October 6, 2011

Abstract

This study examines the motive of stock splits made by REITs. We find that REIT liquidity increases after the split announcement. However, the increase in liquidity is limited to days around the split announcement. After the ex-date, the liquidity tends to revert back to the pre-split level. We find that the positive market reaction around the announcement date is positively related to the change in short-term liquidity but not to the change in long-term liquidity. The announcement effect is also not correlated with future changes in operating performance. Overall, our results suggest that REITs split their share to attract investors' attention rather than to signal or to improve trading liquidity in the long run.

Keywords: REIT stock split, Liquidity, Attention-grabbing, Signaling

JEL Classification: G32

Suggested Citation

Huang, Gow-Cheng and Liano, Kartono and Pan, Ming-Shiun, REIT Stock Splits and Liquidity Changes (October 6, 2011). Journal of Real Estate Finance and Economics, Vol. 43, No. 4, 2011. Available at SSRN: https://ssrn.com/abstract=1939974

Gow-Cheng Huang

Alabama State University - Department of Accounting and Finance ( email )

P.O. Box 271
Montgomery, AL 36101-0271
United States
334-229-6920 (Phone)
334-265-0914 (Fax)

Kartono Liano (Contact Author)

Mississippi State University - Department of Finance and Economics ( email )

P.O. Box 9580
Mississippi State, MS 39762
United States
601-325-1981 (Phone)
601-325-1977 (Fax)

Ming-Shiun Pan

Shippensburg University - Department of Finance and Management Information & Analysis ( email )

Shippensburg University
Shippensburg, PA 17257
United States
717-477-1683 (Phone)
717-477-4067 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
625
PlumX Metrics