Stock Splits Puzzle: An Additional Answer From Pre‐Split Earnings Announcements

ABSTRACT If stock splits are used by managers to convey private information to the public, we hypothesize that the information content of splits should be related to the information managers reveal during quarterly earnings announcements. Supporting this hypothesis, we find that post‐split stock returns and operating earnings growth are positively correlated with the 5‐day returns around the last earnings announcement prior to the splits. This relationship holds even after controlling for different characteristics, including size, book‐to‐market, and momentum. These findings add new evidence to the rich literature on the signaling hypothesis regarding the motivation behind this corporate event.

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Publication Details

Journal
Journal of Corporate Accounting & Finance
Published
2024-09-23
DOI
https://doi.org/10.1002/jcaf.22754
Citations
1
Primary Topic
Financial Markets and Investment Strategies
Type
article
Field-Weighted Citation Impact
0.54
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article

Stock Splits Puzzle: An Additional Answer From Pre‐Split Earnings Announcements

Hoang Nguyen, Nguyễn Thùy Dương, The Anh Pham, Hao Quach
1 citations
Journal of Corporate Accounting & Finance
Financial Markets and Investment Strategies
0.54
article

Stock Splits Puzzle: An Additional Answer From Pre‐Split Earnings Announcements

Hoang Nguyen, Nguyễn Thùy Dương, The Anh Pham, Hao Quach
article en
1 citations

Abstract

ABSTRACT If stock splits are used by managers to convey private information to the public, we hypothesize that the information content of splits should be related to the information managers reveal during quarterly earnings announcements. Supporting this hypothesis, we find that post‐split stock returns and operating earnings growth are positively correlated with the 5‐day returns around the last earnings announcement prior to the splits. This relationship holds even after controlling for different characteristics, including size, book‐to‐market, and momentum. These findings add new evidence to the rich literature on the signaling hypothesis regarding the motivation behind this corporate event.

Journal of Corporate Accounting & FinanceVol. 36(2)
University of Massachusetts Dartmouth (US), National Economics University (VN), University of Lincoln (GB), University of Baltimore (US)
Openalex Percentile: Top 30%
Financial Markets and Investment Strategies
0.54
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