Corporate social responsibility and stock split

Maretno A. Harjoto (), Dongshin Kim (), Indrarini Laksmana () and Richard C. Walton ()
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Maretno A. Harjoto: Pepperdine University
Dongshin Kim: Pepperdine University
Indrarini Laksmana: Kent State University
Richard C. Walton: Pepperdine University

Review of Quantitative Finance and Accounting, 2019, vol. 53, issue 2, No 9, 575-600

Abstract: Abstract This study examines whether socially responsible companies are likely to conduct a stock split. We argue that these companies, compared to their counterparts, could use their strong corporate social responsibility (CSR) performance to reduce information asymmetry with shareholders, and therefore, are less likely to rely on stock splits to signal their future growth potentials. We find empirical evidence to support our hypothesis and investigate the reasons for the lower frequency of stock splits among CSR oriented firms. We find that more socially responsible firms experience a smaller increase in trading volume and a greater increase in bid-ask spread following a stock split than less socially responsible firms. Furthermore, our study finds that, when more socially responsible firms decide to conduct a stock split, they attract a greater proportion of institutional investors with long-term investment horizons.

Keywords: Stock split; CSR; Stakeholder theory; Liquidity; Long-term return (search for similar items in EconPapers)
JEL-codes: G30 G32 G35 M14 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11156-018-0759-9

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