The effects of stock splits on stock liquidity

Gow-Cheng Huang (), Kartono Liano () and Ming-Shiun Pan ()

Journal of Economics and Finance, 2015, vol. 39, issue 1, 119-135

Abstract: This study examines the effects of stock splits on stock liquidity. We find that most liquidity measures increase substantially around the stock split announcement. After the announcement date, split firms’ liquidity declines, but is still above the pre-split level. However, after the ex-date, the liquidity drops below the pre-split level. Thus, the impact of stock splits on stock liquidity appears to be short-lived. We also find that the change in liquidity can significantly explain the announcement effect, but not the ex-date effect. Overall, our results seem to be more consistent with the signaling hypothesis and/or the attention-grabbing hypothesis than with the improved liquidity hypothesis. Copyright Springer Science+Business Media New York 2015

Keywords: Stock splits; Liquidity; Signaling; Attention-grabbing; G14; G30 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:39:y:2015:i:1:p:119-135

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DOI: 10.1007/s12197-013-9250-6

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