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

97-06

31 Pages Posted: 19 Oct 2003

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

Multiple version iconThere are 2 versions of this paper

Date Written: August 1999

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.

JEL Classification: G14; G23; G30

Suggested Citation

Fernando, Chitru S. and Krishnamurthy, Srinivasan and Spindt, Paul A., Is Share Price Related to Marketability? Evidence from Mutual Fund Share Splits (August 1999). 97-06. Available at SSRN: https://ssrn.com/abstract=8288 or http://dx.doi.org/10.2139/ssrn.8288

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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