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The Information Content of Multiple Stock Splits


  • Gow-Cheng Huang
  • Kartono Liano
  • Herman Manakyan
  • Ming-Shiun Pan


We examine the relationship between the frequency of stock splits and firms' motives for splitting their stock. Compared to their peers, infrequent splitters show higher post-split operating performance, but not so for frequent splitters. We find that split ratio and liquidity change explain the stock split announcement effect for the frequent splitters. In contrast, the change in operating performance in the split year explains the announcement effect for the infrequent splitters. Our results suggest that frequent splits are more consistent with the trading range-improved/liquidity hypothesis and infrequent splits are more consistent with the signaling hypothesis. Copyright (c) 2008, The Eastern Finance Association.

Suggested Citation

  • Gow-Cheng Huang & Kartono Liano & Herman Manakyan & Ming-Shiun Pan, 2008. "The Information Content of Multiple Stock Splits," The Financial Review, Eastern Finance Association, vol. 43(4), pages 543-567, November.
  • Handle: RePEc:bla:finrev:v:43:y:2008:i:4:p:543-567

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    Cited by:

    1. Khamis H. Al-Yahyaee, 2014. "Frequency and Motives for Stock Dividends in a Unique Environment," International Review of Finance, International Review of Finance Ltd., vol. 14(2), pages 295-318, June.
    2. Al-Yahyaee, Khamis Hamed, 2014. "Shareholder wealth effects of stock dividends in a unique environment," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 28(C), pages 66-81.
    3. Scott Walker, 2015. "Repeated Dividend Increases: A Collection of Four Essays," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 17, June.

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