Corporate actions and the manipulation of retail investors in China: An analysis of stock splits

Sheridan Titman, Chishen Wei and Bin Zhao

Journal of Financial Economics, 2022, vol. 145, issue 3, 762-787

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 presplit levels. Using account level data, 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 postsplit 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.

Keywords: Stock price manipulation; Stock splits; Retail investors; China (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:145:y:2022:i:3:p:762-787

DOI: 10.1016/j.jfineco.2021.09.018

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