Intra-Industry Reactions to Stock Split Announcements
We examine whether favorable information conveyed by stock split announcements transfers to nonsplitting firms within the same industry. On average, nonsplitting firms' shareholders experience positive and significant abnormal returns at the stock split announcements of their industry counterparts. In addition, industrywide and firm-specific characteristics are important determinants in explaining nonsplitting firms' stock returns. These firms' earnings increase significantly, and the earnings changes are positively related to the stock price reactions. Finally, we find no evidence that investors revise the value of nonsplitting firms because they anticipate a decline in earnings volatility. Southern Finance Association and the Southwestern Finance Association.
Year of publication: |
2002
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Authors: | Tawatnuntachai, Oranee ; D'Mello, Ranjan |
Published in: |
Journal of Financial Research. - Southern Finance Association - SFA, ISSN 0270-2592. - Vol. 25.2002, 1, p. 39-57
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Publisher: |
Southern Finance Association - SFA Southwestern Finance Association - SWFA |
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