Stock distributions and the Retained Earnings Hypothesis revisited

Jason E. Heavilin and Hilmi Songur

Finance Research Letters, 2019, vol. 30, issue C, 240-245

Abstract: Large stock distributions may be accounted for as stock splits or stock dividends. The Retained Earnings Hypothesis (REH) suggests that the latter method of accounting signals improving future cash flows, but prior evidence is mixed and the debate is still open. We use a large sample of stock distribution and document economically significant evidence consistent with the REH which helps resolve the open debate.

Keywords: Stock split; Stock dividend; Retained Earnings Hypothesis (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:30:y:2019:i:c:p:240-245

DOI: 10.1016/j.frl.2018.10.002

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