Download or read book The Effect of Stock Splits on Liquidity written by Patrick Dennis and published by . This book was released on 1998 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Effect of Stock Splits on Liquidity written by Patrick Dennis and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Effect of Stock Splits on Liquidity and Excess Returns written by Patrick J. Dennis and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the influence of firm ownership composition on both the abnormal returns at the announcement of a stock split and liquidity changes following a stock split. We find three results. First, the largest post-split increase in institutional ownership occurs for firms that had low institutional ownership before the split. Second, changes in liquidity are negatively related to the level of institutional ownership before the split. Last, the abnormal return following a split is negatively related to the level of institutional ownership before the split. These findings are important as they shed new light on the source of stock split announcement returns.
Download or read book Further Evidence on the Impact of Stock Splits on Trading Liquidity written by Józef Rudnicki and published by . This book was released on 2013 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: Stock splits have attracted the attention of academicians and practitioners for a long time. Many debates revolve around these often called "cosmetic” events that do not bring about any direct valuation implications. In spite of their simplicity and theoretically no motivation for any potential reaction this corporate event exerts influence on various stock's characteristics like liquidity, rates of return, shareholders' base etc. Considering the time period 2000-May 2011 the author examines the behavior of share volume following the stock splits of companies listed on the New York Stock Exchange and reports a 1-percent significant deterioration of this proxy of liquidity. Additionally, the greatest amplitude of abnormal changes in liquidity is observed during two trading sessions around the actual stock split although there is provided no new information to the market through the physical split of the shares outstanding since it is well-known in advance. The results obtained are indicative of the fact that splitting the stock as opposed to liquidity and/or trading range hypotheses on splits leads to liquidity deterioration what, in turn, should result in greater liquidity risk faced inter alia by brokers and/or market makers who may be willing to compensate for this unfavorable corollary of the corporate event at issue and, as a result, to charge higher transaction costs in the form of e.g. greater bid-ask spreads. On the other hand, shareholders, both existing and prospective, are likely to demand higher compensation for increased risk by requiring greater returns on such stocks.
Download or read book Stock Splits Liquidity and Limit Orders written by Marc Lipson and published by . This book was released on 1999 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Stock Splits and Liquidity written by Patrick J. Dennis and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In an attempt to disentangle the signaling effect from the liquidity effect of stock splits, I examine the liquidity changes following the two-for-one split of the Nasdaq-100 Index Tracking Stock. Since there can be no signaling with an index stock split, any difference between pre- and post-split trading may be driven by liquidity but not signaling effects. I find that though the post-split relative bid-ask spread is higher and daily turnover is unchanged, the frequency, share volume, and dollar-volume of small trades all increased after the split, indicating that the split improved liquidity for small trade-sizes.
Download or read book Stock Splits written by Chris J. Muscarella and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Stock splits are a common capital structure alteration which ought to have no effect on firm value in perfect capital markets. Empirical studies find that stock prices increase upon announcement of stock splits. The two traditional explanations for the rise in prices are information signaling on the part of managers and improved liquidity for shares that trade at lower prices. We investigate these explanations by studying splits of American Deposit Receipt (ADR) securities which are not associated with splits in the home country stock. We argue that these splits are likely to be motivated by the desire for liquidity improvements only. The results indicate that ADR prices rise by a statistically significant 1 to 2 percent at the announcement. We interpret this evidence as supportive of the liquidity explanation of stock split announcement effects.
Download or read book A stock split event study using sector indices vs CDAX and some extensions of the standard market model written by David Bosch and published by GRIN Verlag. This book was released on 2011-08-03 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2009 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, Humboldt-University of Berlin (Institut für Bank und Börsenwesen), course: Seminar of Banking and Financial Markets, language: English, abstract: There are many theories in literature which try to examine possible reasons for a stock split. While a stock split seems to be just a cosmetic corporate event, it is often claimed that the motivation to carry out a stock split is to signal future profitability or to bring the share price to a preferred trading-range. Additionally there are many papers published, where the impact of a stock split on liquidity and institutional ownership is examined. Some results of these studies are briefly discussed in the Literature Review. Most researchers calculate their abnormal returns with the market model by using the most common index in their economy. In this paper, I check whether sector-indices fit the data better than the CDAX does. In some cases, the sector-indices describe the stock returns better. Another topic of event studies that researchers of the finance area often deal with is whether the assumptions of the market model established by Fama, Fisher, Jensen and Roll (1969) do hold for daily stock returns. I will discuss some of the weaknesses when applied to financial time series and I present two models which can improve the efficiency of the model.
Download or read book The Differences Between Stock Splits and Stock Dividends written by Johannes Raaballe and published by . This book was released on 2004 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract It is often asserted that stock splits and stock dividends are purely cosmetic events. However, many studies have documented several stock market effects associated with stock splits and stock dividends. This paper examines the effects of these two types of events for the Danish stock market. Consistent with the existing literature, the two events are associated with a significantly positive announcement effect of ap- proximately 2.5%. However, when examining the two events more carefully, several important results are obtained. First, a firm's motivation for announcing the two events is completely different. Second, the positive stock market reaction is closely related to associated changes in a firm's payout policy, but the relationship varies for the two types of events. Finally, there is only very weak evidence for a change in the liquidity of the stock. On the whole, after controlling for the firm's payout policy, the results suggest that a stock split is a cosmetic event and that a stock dividend on its own is considered negative news. Key words: Stock splits; Stock dividends; Cash dividends; Signaling; Liquidity.
Download or read book Proceedings of the 4th International Conference on Economic Management and Green Development written by Chunhui Yuan and published by Springer Nature. This book was released on 2021-08-13 with total page 527 pages. Available in PDF, EPUB and Kindle. Book excerpt: The proceedings shed light on selected topics including economic management, public administration, and green development. Featuring scholarly works from the 4th International Conference on Economic Management and Green Development (ICEMGD 2021), this volume of proceedings showcases the papers composed with regard to a diverse range of topics situated at the intersecting field of Economic Management, Public Administration and Green Development. Arising as the top concern of the global community, issues of green development impose challenges for the academia to bridge the interdisciplinary prowess in tackling the gap of knowledge within concerned fields. ICEMGD 2021 is an annual conference initiated by the year of 2017 under the goal of bringing together intellectuals from economics, business management, public administration, and otherwise related spheres for the share of research methods and theoretical breakthroughs. The aim of the proceeding volume is for the integration of social scientific research methods with research into alarming development issues. The ICEMGD 2021 seeks to promote joint initiatives among well-established fields like macro- and microeconomics, international economics, finance, agricultural economics, health economics, business management and marketing strategies, regional development studies, social governance, and sustainable development. Featuring interdisciplinary contributions, this book will be of interest to researchers, academics, professionals and policy makers in the field of economic management, public administration, and development studies.
Download or read book The Information Content of Multiple Stock Splits written by Gow-Cheng Huang and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the relationship between the frequency of stock splits and firms' motives for splitting their stock. Compared to their peers, infrequent splitters show higher post-split operating performance, but not so for frequent splitters. We find that split ratio and liquidity change explain the stock split announcement effect for the frequent splitters. In contrast, the change in operating performance in split year explains the announcement effect for the infrequent splitters. Our results suggest that frequent splits are more consistent with the trading range/improved liquidity hypothesis and infrequent splits are more consistent with the signaling hypothesis.
Download or read book The Effect of Stock Splits on Excess Returns written by Ali Osman Gurbuz and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Since Istanbul Stock Exchange is a young emerging stock exchange, the Turkish companies lack of equity capital. In a high inflationary world without having an inflation accounting system paying cash dividend can be disastrous for firms with low equity capital base. Therefore it is hardly difficult to observe cash dividend payments. The basic result of this widely used application is low dividend yields in emerging markets. As an emerging market investors seem to be attracted by capital gains and especially by gratis shares which can be seen as stock splits. Although stock splits seem to be a cosmetic transaction there are empirical evidence for United States that splits have effect on liquidity and returns. The purpose of the paper is to investigate the effects of stock splits on (liquidity and) excess returns and compare the results with the developed stock exchange cases. (Also the attention will be paid to price elasticity of demand during and after stock splits.)* Concepts which are not considered in the paper, but were seen in the first draft of the above abstract are indicated in parentheses.
Download or read book Liquidity Market Structure and Stock Splits written by David Michayluk and published by . This book was released on 2001 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Transaction Size Order Submission and Price Preferences Around Stock Splits written by José Yagüe and published by . This book was released on 2003 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyse the effect of splits on stock liquidity. The results show a drop in trading volume and depth and an increase in the relative bid-ask spread. We detect a change in trading composition, with an increase in the smallest transactions, mainly on the buyer side of shares whose prices fall significantly after the split. The information asymmetry does not diminish, given that the adverse selection component of the effective spread reduces only insignificantly for the full sample. Finally there are not significant changes in the percentage of orders that provide liquidity to the market. These findings indicate that splits, despite higher transaction costs, encourage the entry of small investors attracted by the lower stock prices.
Download or read book The Effect of Stock Split ups and Stock Dividends on Market Price written by Roger Lee Miller and published by . This book was released on 1962 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Utility Stock Splits written by Maria Mercedes Miranda and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the rich literature on theories of stock splits, studies have omitted public utility firms from their analysis and only analyzed split by industrial firms when examining managerial motives for splitting their stock. I examine the liquidity-marketability hypothesis, which states that stock splits enhance the attractiveness of shares to individual investors and increase trading volume by adjusting prices to an optimum trading range. Changes in the regulatory process, resulting from EPACT, have opened a window of opportunity for the study and comparison of the two traditional motives for splitting stock --signaling versus liquidity-marketability motives. Public electric utility firms provide a clean testing ground for these two non-mutually exclusive theories as liquidity/marketability hypothesis should dominate before the enactment of the EPACT since the conventional signaling theory of common stock splits should not apply given the low levels of information asymmetry in regulated utility companies. In the post-EPACT period, however, the signaling effect is expected to play a more dominant role. Based on both univariate and multivariate analyses, my results are consistent with the hypothesis posed. For the pre-EPACT period, liquidity motive seems to predominate in explaining the abnormal announcement return of utility stock splits. On the other hand, the results support the signaling motive as a leading explanation of abnormal returns in the post-EPACT period.
Download or read book Do Stock Splits Improve Liquidity written by Ruslan Goyenko and published by . This book was released on 2014 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The prior literature finds that stock splits worsen liquidity, as measured by percent effective spread, over a short horizon (60 to 180 days) after the split. We innovate by examining a long-horizon window after the split and by using new proxies for percent spread constructed from daily data. This allows us to track the liquidity of thousands of stock splits taking place from 1963 through 2003. We find that both the percent spread of NASDAQ split firms and the spread proxies of NYSE/AMEX split firms temporarily increase, but return to even with the control firms in 5 to 12 months. This is our first result. This result provides a missing link supporting the signaling theory of splits. We also establish a second result. We find that split firms are experiencing gains in liquidity at longer horizons. The percent spread of NASDAQ split firms becomes significantly lower than that of the control firms in 12 to 39 months. The spread proxies for NYSE/AMEX split firms become lower than the spreads for the control firms in 12 to 24 months. The NYSE/AMEX results are robust to three different liquidity proxies. This suggests a net benefit of splitting, which provides a missing link supporting both the trading range theory and the optimal tick size theory. All three theories could be true at the same time and our findings provide new evidence supporting all three theories.
