Is Share Price Related to Marketability? Evidence from Mutual Fund Share Splits

Financial Management, Vol. 28, No. 3, Autumn 1999

Posted: 16 Aug 2001

See all articles by Chitru S. Fernando

Chitru S. Fernando

University of Oklahoma - Michael F. Price College of Business

Srinivasan Krishnamurthy

North Carolina State University - Poole College of Management

Paul A. Spindt

Tulane University - A.B. Freeman School of Business

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Abstract

We examine the "marketability hypothesis," which states that stock splits enhance the attractiveness of shares to investors by restoring prices to a preferred trading range. We examine splits of mutual fund shares because they provide a clean testing ground for the marketability hypothesis, since the conventional rationales for common stock splits do not apply. We find that splitting funds experience significant increases (relative to non-splitting matched funds) in net assets and shareholders. Stock splits do appear to enhance marketability.

Suggested Citation

Fernando, Chitru S. and Krishnamurthy, Srinivasan and Spindt, Paul A., Is Share Price Related to Marketability? Evidence from Mutual Fund Share Splits. Financial Management, Vol. 28, No. 3, Autumn 1999. Available at SSRN: https://ssrn.com/abstract=267699

Chitru S. Fernando (Contact Author)

University of Oklahoma - Michael F. Price College of Business ( email )

Adams Hall
307 West Brooks Street
Norman, OK 73019-4004
United States
405-325-2906 (Phone)
405-325-7688 (Fax)

HOME PAGE: http://faculty-staff.ou.edu/F/Chitru.Fernando-1/

Srinivasan Krishnamurthy

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States

Paul A. Spindt

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States
504-865-5413 (Phone)

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