The Effect of Stock Splits on Excess Returns: Evidence from Istanbul Stock Exchange

Posted: 15 Jan 2001

See all articles by Ali Osman Gurbuz

Ali Osman Gurbuz

Marmara University - Faculty of Economics and Administrative Sciences

Saadet Tantan

Marmara University - School of Banking and Insurance

Handan Yolsal

Marmara University

Date Written: July 2000

Abstract

Since Istanbul Stock Exchange is a young emerging stock exchange, the Turkish companies lack of equity capital. In a high inflationary world without having an inflation accounting system paying cash dividend can be disastrous for firms with low equity capital base. Therefore it is hardly difficult to observe cash dividend payments. The basic result of this widely used application is low dividend yields in emerging markets. As an emerging market investors seem to be attracted by capital gains and especially by gratis shares which can be seen as stock splits. Although stock splits seem to be a cosmetic transaction there are empirical evidence for United States that splits have effect on liquidity and returns. The purpose of the paper is to investigate the effects of stock splits on (liquidity and) excess returns and compare the results with the developed stock exchange cases. (Also the attention will be paid to price elasticity of demand during and after stock splits.)

* Concepts which are not considered in the paper, but were seen in the first draft of the above abstract are indicated in parentheses.

Keywords: Stock splits

JEL Classification: G14

Suggested Citation

Gurbuz, Ali Osman and Tantan, Saadet and Yolsal, Handan, The Effect of Stock Splits on Excess Returns: Evidence from Istanbul Stock Exchange (July 2000). EFMA 2000 Athens. Available at SSRN: https://ssrn.com/abstract=253408

Ali Osman Gurbuz (Contact Author)

Marmara University - Faculty of Economics and Administrative Sciences ( email )

Goztepe Campus
Istanbul
Turkey
+90 (216)3365273 (Phone)
+90 (216) 3384416 (Fax)

Saadet Tantan

Marmara University - School of Banking and Insurance ( email )

Goztepe Campus
Capital Markets
Istanbul
Turkey
+90 (216) 4490359 (Phone)
+90 (216) 347 50 86 (Fax)

Handan Yolsal

Marmara University ( email )

Goztepe Campus
Istanbul, Istanbul 34840
Turkey

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