The stock split and dividend effect: information or price pressure?

Alternative views hold that excess returns associated with a stock split result from either an information impact or from a liquidity premium or price pressure. An analysis is based on 500 firms that are listed on either the New York or American Stock Exchange and that have had stock splits or stock...

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Bibliographic Details
Published inApplied economics Vol. 22; no. 7; pp. 927 - 932
Main Author Dowen, Richard J.
Format Journal Article
LanguageEnglish
Published London, etc Chapman & Hall Ltd 01.07.1990
Chapman and Hall, etc
Taylor & Francis Ltd
Subjects
Dividends
Earnings per share
Economic models
Effects
Excess
Hypotheses
Information
Liquidity
Prices
Statistical analysis
Stock prices
Stock returns
Stock splits
Stocks
Studies
United States > US
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Summary:Alternative views hold that excess returns associated with a stock split result from either an information impact or from a liquidity premium or price pressure. An analysis is based on 500 firms that are listed on either the New York or American Stock Exchange and that have had stock splits or stock dividends of 10% or greater, with 100 firms in each year from 1980 to 1984. It is clear from the results that the excess return is associated with the size of the split. The results are consistent with a liquidity premium or price pressure hypothesis. The results also suggest that stock splits do not provide any information about future cash flows to investors. Stock splits will still produce excess returns even after analysts' forecasts are taken into account.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0003-6846
1466-4283
DOI:10.1080/00036849000000030