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Corporate Actions and the Manipulation of Retail Investors in China: An Analysis of Stock Splits

Sheridan Titman, Chishen Wei (profwei@outlook.com) and Bin Zhao

No 29212, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We identify a group of “suspicious” firms that use stock splits—perhaps, along with other activities—to artificially inflate their share prices. Following the initiation of suspicious splits, share prices temporarily increase, and subsequently decline below their pre-split levels. Using account level data from the Shanghai Stock Exchange, we find that small retail investors acquire shares in firms initiating suspicious splits, while more sophisticated investors accumulate positions before suspicious split announcements and sell in the post-split period. We also find that insiders sell large blocks of shares and obtain loans using company stock as collateral around the initiation of suspicious splits.

JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-cna, nep-fmk and nep-isf
Note: AP
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published as Sheridan Titman & Chishen Wei & Bin Zhao, 2021. "Corporate actions and the manipulation of retail investors in China: An analysis of stock splits," Journal of Financial Economics, .

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