Intra-industry reactions of stock split announcements
This paper examines whether favorable information conveyed by stock split announcements transfers to non-splitting firms within the same industry. We find that there exists intra-industry reaction; shareholders of non-splitting firms experience significant positive abnormal returns during the stock split announcement period of their industry counterparts. In addition, we find that industry-wide (level of concentration) and firm-specific characteristics (degree of similarity with the splitting firm, level of asymmetric information, and mispricing) are important determinants in explaining the impact of the announcements on non-splitting firms. We further document an increase in earnings subsequent to the announcements which is associated to the stock price reactions. However, we find little evidence that there is a decline in earnings volatility and find no significant relation between change in earnings volatility and announcement period returns.
|Date of creation:||Jun 1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (504) 280-6485
Web page: http://www.uno.edu/~coba/econ/index.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:uno:wpaper:1999-01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Janet Murphy Crane)
If references are entirely missing, you can add them using this form.