Stock Split Decisions: A Synthesis of Theory and Evidence

Journal of Applied Finance, Fall/Winter 2012, Volume 22, No. 2

Posted: 16 Jul 2013

See all articles by Junbo Wang

Junbo Wang

Dept. of Economics and Finance, City Univ. of HK

Date Written: July 15, 2013

Abstract

This paper reviews various studies of forward and reverse stock splits in the areas of motives for splits, split practices, split effects on firm value, and changes in market activities around splits. It focuses on three hypotheses and their extended evidence. As our analysis shows, the optimal price/tick hypothesis is widely supported and applied; the signaling hypothesis is supported by limited empirical results; and the procedure/structure hypothesis, backed up by some evidence, complements the first and second hypotheses.

Keywords: split effects on firm value, price/tick hypothesis, exchange-traded funds (ETFs)

Suggested Citation

Wang, Junbo, Stock Split Decisions: A Synthesis of Theory and Evidence (July 15, 2013). Journal of Applied Finance, Fall/Winter 2012, Volume 22, No. 2 , Available at SSRN: https://ssrn.com/abstract=2294044

Junbo Wang (Contact Author)

Dept. of Economics and Finance, City Univ. of HK ( email )

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