Stock splits in a neutral transaction cost environment: Evidence from the Athens Stock Exchange
This paper investigates the value consequences of stock splits in a market where institutional characteristics minimize the effects of price realignment and signaling. We find that despite these market conditions, stock splits by Greek firms produce positive price reaction around the announcement da...
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Published in | Journal of multinational financial management Vol. 19; no. 1; pp. 12 - 25 |
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Main Authors | , , , |
Format | Journal Article |
Language | English |
Published |
Elsevier B.V
01.02.2009
Elsevier |
Series | Journal of Multinational Financial Management |
Subjects | |
Online Access | Get full text |
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Summary: | This paper investigates the value consequences of stock splits in a market where institutional characteristics minimize the effects of price realignment and signaling. We find that despite these market conditions, stock splits by Greek firms produce positive price reaction around the announcement day. Further, split factors are directly related to pre-split price levels and deviations from average market prices. Splitting firms also realize earnings improvement which is not reversed after the stock split. Consistent with these findings, market reaction is inversely related to the post-split target price and the size of firm. We interpret this as evidence in support, respectively, of the self-selection and “attention-gathering” hypotheses. As reported in other international studies, there is no evidence of liquidity improvement. |
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Bibliography: | ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 1042-444X 1873-1309 |
DOI: | 10.1016/j.mulfin.2008.02.003 |