TY - JOUR
T1 - Intra-industry reactions to stock split announcements
AU - Tawatnuntachai, Oranee
AU - D'Mello, Ranjan
PY - 2002/3
Y1 - 2002/3
N2 - We examine whether favorable information conveyed by stock split announcements transfers to nonsplitting firms within the same industry. On average, nonsplitting firms' shareholders experience positive and significant abnormal returns at the stock split announcements of their industry counterparts. In addition, industrywide and firm-specific characteristics are important determinants in explaining nonsplitting firms' stock returns. These firms' earnings increase significantly, and the earnings changes are positively related to the stock price reactions. Finally, we find no evidence that investors revise the value of nonsplitting firms because they anticipate a decline in earnings volatility.
AB - We examine whether favorable information conveyed by stock split announcements transfers to nonsplitting firms within the same industry. On average, nonsplitting firms' shareholders experience positive and significant abnormal returns at the stock split announcements of their industry counterparts. In addition, industrywide and firm-specific characteristics are important determinants in explaining nonsplitting firms' stock returns. These firms' earnings increase significantly, and the earnings changes are positively related to the stock price reactions. Finally, we find no evidence that investors revise the value of nonsplitting firms because they anticipate a decline in earnings volatility.
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U2 - 10.1111/1475-6803.00003
DO - 10.1111/1475-6803.00003
M3 - Article
AN - SCOPUS:33747044295
SN - 0270-2592
VL - 25
SP - 39
EP - 57
JO - Journal of Financial Research
JF - Journal of Financial Research
IS - 1
ER -