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The Effect of Managerial Ownership on Stock Split‐Induced Abnormal Returns
Author(s) -
Szewczyk Samuel H.,
Tsetsekos George P.
Publication year - 1993
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1993.tb01352.x
Subject(s) - stock (firearms) , business , monetary economics , economics , mechanical engineering , engineering
This paper tests the proposition that split announcements are informative signals that play a greater information role for widely held firms. We present evidence for an inverse relationship between managerial ownership and the magnitude of stock split‐induced abnormal returns. After controlling for industry and firm size, we find that splitting firms have lower managerial ownership, on average, than nonsplitting firms. We also find no evidence that managers trade on inside information prior to announcing splits.