The Market Reaction to Stock Splits

Christian Wulff
Although stock splits seem to be a purely cosmetic event, there exists ample empirical evidence from the United States that stock splits are associated with abnormal returns on both the announcement and the execution day, and additionally with an increase in variance following the ex-day. This paper investigates the market reaction to stock splits using a set of German firms. Consistent with the U.S. findings, similar effects are observed for the sample of German stock...
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