stock splits
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Jeli nata Liyas

Corporate Action namely every action of the issuer that gives equal rights to all shareholders such as Dividends, Right Issues and Stock Splits. Dividend is the distribution of company profits to shareholders based on the percentage of ownership of capital owners. Management decisions in seeking new capital or funds through the stock exchange floor are usually for debt repayment actions, company goals, expansion through product innovation in improving and maintaining company stability for better prospects in the future so as to encourage the government to build a better economy in the next period. Corporate action applies to all companies, not limited to public companies. Several forms of corporate action that are generally carried out by issuers include the distribution of dividends, both cash and shares,

2021 ◽  
pp. 1-14

A stock split is when a company’s outstanding shares are divided into multiple shares by issuing more shares to current shareholders without eroding their stake’s value. The company typically takes these actions to increase liquidity and marketability, lower stock prices, attract new investors and so on. The purpose of this study is to examine the impact of stock splits on the stock returns during the study period. Companies listed on the Bombay Stock Exchange (BSE) and those included in the S&P BSE 500 Index are included in the stock split data. The study period covers 14 years, between 2008 and 2021. Market model event study methodology is being employed to analyze the average abnormal returns (AARs), cumulative abnormal returns (CARs) and cumulative AAR (CAARs) using an event window period consisting of 31 days ([Formula: see text]). The study is largely based on secondary information from the CMIE Prowess IQ Database and the official BSE website. The [Formula: see text]-test, mean and standard deviation were used to investigate the influence of stock split announcements on share prices and the performance of stock splits before and after the announcement. The study found that on ([Formula: see text]), ([Formula: see text]), ([Formula: see text]) and ([Formula: see text]) and on the day of the announcement ([Formula: see text]), the market reacted favorably with significant positive abnormal returns. On ([Formula: see text]) and ([Formula: see text]) days, however, there were significant negative abnormal returns. The null hypothesis is accepted as the CAR for the whole 31-day event window, which is 0.0221, with a [Formula: see text]-statistic of 1.692, which is insignificant.

2021 ◽  
Vol 7 (2) ◽  
W. S. S Soyza ◽  
K. A. S. S. Kodithuwakku ◽  
S.M.R.K. Samarakoon

A stock split is a corporate event that directly impacts the number of a company’s shares and indirectly on stock prices. This study tests the effect of the stock splits on the share price of companies listed in the Colombo Stock Exchange during the periods of pre and post stock split announcement in accordance with the Efficient Market Hypothesis. The main objective of this paper is to identify the overall impact of a stock split announcement on stock prices. This study analyses 88 annual stock splits during the ten (10) year period from 2009 to 2019 by taking the listed companies in the Colombo Stock Exchange into consideration. It uses the event study methodology to test the market efficiency of the Colombo Stock Exchange, and the market model is run with the aid of abnormal returns, which are calculated based on daily closing stock prices and the All-Share Price Index. For analysing the results, the graphical analysis and t statistics have been utilized. According to the event day average abnormal return, the majority of stock splits were more negative than positive with a significant t value at 5% by indicating that investors were taking the stock split announcement as bad news just after the split announcement was released. Each day with a significant Average Abnormal Return shows more positives than negatives. Graphical results have shown both Average Abnormal Return, and Cumulative Average Abnormal Return has remained continuously negative up to 18 and 25 days, respectively, by implicating that stock splits have made a deleterious impact on stock return. This study finally concludes that the information regarding the stock splits has not been absorbed efficiently by the market because the market reactions before and after the date of the split announcement were significant at 5%, although the Average Abnormal Return got a quick reaction to the announcement. Furthermore, results had not provided evidence for Semi-Strong Form efficiency of the Colombo Stock Exchange since the significant stock price adjustments before and after the event day was noticed. By this study, the policymakers and investors are convinced that all information has not been incorporated into stock prices in making their decisions.

Ahmed M. Elnahas ◽  
Pankaj Jain ◽  
Thomas H. McInish

2021 ◽  
Vol 1 (7) ◽  
pp. 629-640
Jerri Priatno ◽  
Freddy Freddy

Strong companies will not be too affected by news issues about stock splits, but several other companies that do stock splits actually experience a decline in demand for their shares. This study aims to analyze the effect of stock splits on abnormal stock returns and stock liquidity. In this study, the authors use quantitative research methods with a descriptive research approach, because there are variables to be examined and the relationship aims to describe the characteristics or behavior of a population in a systematic and accurate way regarding the relationship between the variables to be studied. The population in this study are companies listed on the Indonesia Stock Exchange, namely companies that carried out stock splits in 2019. Based on the results of research, the authors draw the following conclusions: Based on statistical tests on abnormal returns, it was found that market reactions occurred during the day after the stock split, the first day until the fourth day after the stock split. Based on the results of the different tests on Abnormal Returns before and after the stock split, it shows that there is a significant difference between the returns before and after the stock split. Based on the results of the different tests on the average TVA before and after the stock split, it shows that there is a significant difference between TVA before and after the stock split.

Nihat Gumus ◽  
Ayse Caglayan Gumus

The purpose of this study is to investigate the impact of stock splits on the return, riskiness, and liquidity of stocks. Utilizing a sample of 94 stock splits taken place between 2010 and 2019 at Borsa Istanbul, the study analyzes the daily abnormal returns, change in volatility, and changes in volume around the stock split announcement and execution dates. The results display significant positive abnormal returns around the announcement date but not significant abnormal returns around the execution. The volatility and liquidity of stocks increase significantly around both announcement and execution dates. The findings are in line with the positive signaling, and liquidity hypotheses of stock split and with most of the observations reported in the empirical literature. The new evidence provided points out the lack of semi-strong form of market efficiency at Borsa Istanbul as far as the stock splits are considered.

2021 ◽  
Vol 5 (1) ◽  
pp. 1-14
Yani Riyani ◽  
Kartawati Mardiah ◽  
Rizky Adithya

Penelitian reaksi pasar modal akibat aksi stock dividends dan stock splits dibeberapa Pasar Modal Dunia menemukan hasil berbeda. Penelitian ini untuk mengetahui reaksi pasar modal Indonesia akibat aksi stock dividends dan stock splits serta pengaruhnya terhadap harga saham. Bentuk penelitian adalah studi peristiwa dengan jendela 7 hari sebelum dan sesudah aksi. Dengan purposive sampling maka terdapat 75 sampel dengan 5 sampel melakukan aksi stock dividends dan 70 aksi stock splits. Menggunakan Uji t satu sampel, Uji t sampel berpasangan atau wilcoxon test dan regresi sederhana menghasilkan: aksi stock dividend menyebabkan pasar modal bereaksi disepanjang t-7 sampai t+7 dan berdistribusi normal, aksi stock splits menyebabkan pasar modal bereaksi pada t-3 sampai t+3 dan berdistribusi tidak normal, terdapat perbedaan reaksi pasar atas kedua aksi, stock dividend berpengaruh terhadap harga saham sementara stock splits tidak. Adanya reaksi pasar terhadap aksi stock dividend maupun stock splits memberikan bukti empiris mendukung teori signalling

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