Stock-Splits and Information: The Role of Share Price

Darden Business School Paper No. 98-01

Posted: 27 Jun 2001

See all articles by Robert M. Conroy

Robert M. Conroy

University of Virginia - Darden School of Business

Robert S. Harris

University of Virginia - Darden School of Business

Date Written: March 1998

Abstract

Our empirical investigation of announced split factors, split announcement returns, and revisions of analysts' earnings forecasts shows that a firm's past history of stock splits plays a crucial role in both the design and effect of current splits. Managers appear to design splits to return their company's stock price to the price level achieved after the last split. Moreover, when managers announce a split factor to achieve an even lower price than in the last split, both investors and analysts interpret this as a signal of especially positive information.

Suggested Citation

Conroy, Robert M. and Harris, Robert S., Stock-Splits and Information: The Role of Share Price (March 1998). Darden Business School Paper No. 98-01, Available at SSRN: https://ssrn.com/abstract=267697

Robert M. Conroy (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/conroy.htm

Robert S. Harris

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4823 (Phone)
434-924-4859 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/harris.htm

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