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Stock Splits: Prior and Subsequent Price Relationships
Author(s) -
FINN FRANK J.
Publication year - 1974
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1974.tb00852.x
Subject(s) - shareholder , stock (firearms) , earnings , stock price , economics , restricted stock , financial economics , stock market , monetary economics , stock market bubble , business , finance , corporate governance , series (stratigraphy) , mechanical engineering , paleontology , horse , engineering , biology
Although it has long been recognized that a stock split merely changes the packaging of an investor's claim to earnings, there is widespread belief in the financial community that the split confers some substantive benefits on stockholders. This paper describes an empirical investigation of the effect of split action on stock price. The split action was found to have an insignificant effect, even at a 10% level, on changes in market price over the 12 month period surrounding the split.