The Effect of Stock Splits on the Ownership Structure of Firms

Posted: 28 Oct 2002

See all articles by Sandip Mukherji

Sandip Mukherji

Howard University - School of Business

Yong H. Kim

University of Cincinnati

Michael C. Walker


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Although several researchers have speculated that stock splits may affect the ownership structure of firms, there is very little empirical evidence available in this regard. We investigate a broad sample of stock splits by firms without confounding events, controlling for industry and size effects. Our results show that stock splits increase the numbers of both individual and institutional shareholders, and they do not affect the proportion of equity held by institutions. Further, changes in the numbers of individual and institutional shareholders are positively related to the split factor. Abnormal announcement returns are positively correlated with changes in the total number of shareholders. These findings support the signaling hypothesis.

Keywords: stock splits, ownership structure, signaling

JEL Classification: G35, G32, G14, G2

Suggested Citation

Mukherji, Sandip and Kim, Yong H. and Walker, Michael C., The Effect of Stock Splits on the Ownership Structure of Firms. Available at SSRN:

Sandip Mukherji

Howard University - School of Business ( email )

2600 Sixth Street, NW
Washington, DC 20059
United States
202-806-1591 (Phone)

Yong H. Kim (Contact Author)

University of Cincinnati ( email )

Lindner College of Business
410 Carl H. Lindner Hall, P.O. Box 210195
Cincinnati, OH 45221
United States
513-556-7084 (Phone)
513-556-0979 (Fax)

Michael C. Walker


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