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Stock Splits: Evidence from Mutual Funds
Author(s) -
Rozeff Michael S.
Publication year - 1998
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.125499
Subject(s) - mutual fund , closed end fund , open end fund , income fund , fund of funds , shareholder , market liquidity , business , fund administration , tick size , monetary economics , stock (firearms) , sovereign wealth fund , economics , financial economics , finance , institutional investor , incentive , corporate governance , microeconomics , geography , archaeology
Mutual fund splits occur in high‐priced funds after unusually high returns. Split factors are related to the deviation of a fund's price from the mean of all fund prices. Post‐split prices are below the mean of other funds' prices. Post‐split numbers of shareholders and assets do not increase compared with funds having similar rates of asset growth. However, I find evidence that mutual fund splits bring per account shareholdings back up to normal levels. I argue that signaling, liquidity, and tick size theories do not apply to mutual fund splits.