Real determinants of stock split announcements

Hu, M, Chao, C, Malone, C and Young, M 2017, 'Real determinants of stock split announcements', International Review of Economics and Finance, vol. 51, pp. 574-598.


Document type: Journal Article
Collection: Journal Articles

Title Real determinants of stock split announcements
Author(s) Hu, M
Chao, C
Malone, C
Young, M
Year 2017
Journal name International Review of Economics and Finance
Volume number 51
Start page 574
End page 598
Total pages 25
Publisher Elsevier BV
Abstract This paper examines the aggregate determinants of corporate events of stock splits. The evidence shows that good market conditions drive firms' decisions to split shares and increase their associated returns, but the dominant effect of macroeconomic factors on stock split announcements is business cycle variations. Firms are most likely to split their shares when they have been experiencing enough excess earnings in economic upturns. This result is more consistent with the Neoclassical Efficiency Hypothesis. This research sheds light on the reasons why we observe corporate events happening in waves and enhance the understanding of why firms split shares at the aggregate level.
Subject Banking, Finance and Investment not elsewhere classified
Keyword(s) Business cycle
Market driven
Stock splits
DOI - identifier 10.1016/j.iref.2017.07.027
Copyright notice © 2017 Published by Elsevier Inc.
ISSN 1059-0560
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