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Analyst coverage and market reaction around stock split announcements


  • Deborah A. Ford
  • Hoang H. Nguyen
  • Van T. Nguyen


This study examines the influence of the number of financial analysts following a firm on market reaction around the announcement of stock splits. Results show that the raw as well as abnormal returns at the announcement of stock splits are negatively related to the level of analyst coverage. The negative relation prevails even after controlling for size, book-to-market, momentum, split factors and post-split target price. Moreover, the impact of analyst coverage on market reaction is stronger for a sample of small size stocks than a sample of large stocks. The findings of this article suggest that information asymmetry is an important factor influencing market reaction to stock split announcements.

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  • Deborah A. Ford & Hoang H. Nguyen & Van T. Nguyen, 2012. "Analyst coverage and market reaction around stock split announcements," Applied Financial Economics, Taylor & Francis Journals, vol. 22(2), pages 135-145, January.
  • Handle: RePEc:taf:apfiec:v:22:y:2012:i:2:p:135-145
    DOI: 10.1080/09603107.2011.605755

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    References listed on IDEAS

    1. Patrick Dennis, 2003. "Stock Splits and Liquidity: The Case of the Nasdaq-100 Index Tracking Stock," The Financial Review, Eastern Finance Association, vol. 38(3), pages 415-433, August.
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