Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062
USA

Conference List

Reminiscing Stock Splits Announcement: A Malaysian Case

Zahiruddin Ghazali

,

Fauziah Md. Taib

,

Noraini Othman

Zahiruddin Ghazali 1
Fauziah Md. Taib 2
Noraini Othman 3

  1. Finance Department, School of Economics, Finance and Banking, Universiti Utara Malaysia 1

  2. School of Management, Universiti Sains Malaysia 2

  3. Management Department, School of Business Management, Universiti Utara Malaysia 3


Abstract:

This study attempts to understands and verify the effects of stock splits on the abnormal returns of announcing companies share prices using Market Adjusted Returns (MAR) Model. Test findings reveal splits announcements in Malaysia result in positive but insignificant abnormal returns. Additional OLS test was carry out to examine the relationship between companies’ cumulative abnormal returns (CAAR) and prior dividend yield (PDY). Result from uni-variate regression analysis shows there is minimal but significant positive relationship between CAAR and PDY.
Contribution/ Originality

Keywords:


Reference:

  1. Aharony, J. and I. Swary, 1980. Quarterly dividend and earnings announcements and stockholder returns: An empirical analysis. Journal of Finance, 35(1): 1-12.
  2. Anonymous, 2010. Effect of stock splits. Available from http://www.scribd.com/doc/45669459/Effect-of-Stock-Split.
  3. Asquith, P., P. Healy and K. Palepu, 1989. Earnings and stock splits. The Accounting Review, 44: 387-403.
  4. Asquith, P. and D. Mullins, 1983. The impact of initiating dividend payments on shareholders' wealth. Journal of Business, 56(1): 77-96.
  5. Asquith, P. and D. Mullins, 1986. The impact of initiating dividend payments on shareholders’ wealth. Journal of Business, 46: 77-96.
  6. Baker, H.K. and P.L. Gallagher, 1980. Management’s view of stock splits. Financial Management, 9: 73-77.
  7. Bar-Yosef, S. and L. Brown, 1977. Re-examination of stock splits using moving betas. Journal of Finance, 32(4): 1069-1080.
  8. Barker, C.A., 1956. Effective stock splits. Harvard Business Review, 34: 101-106.
  9. Bhattacharya, U., H. Daouk, B. Jorgenson and C. Kehr, 2000. When an event is not an event: The curious case of an emerging market. Journal of Financial Economics, 55(1): 69-101.
  10. Brennan, M. and T. Copeland, 1988. Stock splits, stock prices, and transaction costs. . Journal of Applied Business Research, 5(3): 28-38.
  11. Brennan, M.J. and P.J. Hughes, 1991. Stock prices and the supply of information. Journal of Finance, 46(5): 1665-1691.
  12. Brickley, J.A., 1983. Shareholder wealth, information signaling and the specially designated dividend. Journal of Financial Economics, 12(2): 187-209.
  13. Brown, S.J. and J.B. Warner, 1985. Using daily stock returns: The case of event studies. Journal of Financial Economics, 14(1): 3-31.
  14. Byun, J. and M.S. Rozeff, 2003. Long-run performance after stock splits: 1927 to 1996. Journal of Finance, 58(3): 1063-1086.
  15. Campbell, J., Y. Lo and C. McKinlay, 1997. The econometrics of financial markets. Princeton: Princeton University Press.
  16. Chan, K., F. Li and T. Lin, 2012. Informed options trading and stock splits. Working Paper. Available from http://ssrn.com/abstract=2022870.
  17. Charest, G., 1978. Split information, stock returns, and market efficiency. Journal of Financial Economics, 6(2-3): 265-296.
  18. Charitou, A., N. Vafeas and C. Zachariades, 2005. Irrational investor response to stock splits in an emerging market. International Journal of Accounting, 40(2): 133–149.
  19. Copeland, T.E., 1979. Liquidity changes following stock splits. Journal of Finance, 34(1): 115-141.
  20. Dennis, D. and J. McConnell, 1986. Corporate mergers and security returns. Journal of Financial Economics, 17(2): 143-187.
  21. Desai, A., M. Nimalendran and S. Venkataraman, 1998. Changes in trading activity following stock splits and their effect on volatility and the adverse-information component of the bid-ask spread. Journal of Financial and Quantitative Analysis, 21(2): 159-183.
  22. Dhar, S. and C. Sweta, 2008. Market reaction around the stock splits and bonus issues: Some Indian evidence. Working Paper. Available at SSRN: http://ssrn.com/abstract=1087200
  23. Dimson, E. and P. Marsh, 1982. Calculating the cost of capital. Long Range Planning, 15(2): 112-120.
  24. Easley, D., M. O’Hara and G. Saar, 2001. How stock splits affect trading: A microstructure approach. Journal of Financial and Quantitative Analysis, 36(1): 25-51.
  25. Fama, E., L. Fisher, M. Jensen and R. Roll, 1969. The adjustment of stock prices to new information. International Economics Review, 10(1): 1-121.
  26. Grinblatt, M.S., R.W. Masulis and S. Titman, 1984. The valuation effects of stock splits and stock dividends. Journal of Financial Economics, 13(3): 461-490.
  27. Guo, S., M.H. Liu and W. Song, 2008. Stock splits as a manipulation tool: Evidence from mergers and acquisitions. Financial Management, 37(4): 695-712.
  28. Healy, P. and K. Palepu, 1993. The effect of firms' financial disclosure strategies on stock prices. Accounting Horizons, 7(4): 1-11.
  29. Ikenberry, D.L., R. Graeme and K.S. Earl, 1996. What do stock splits really signal? Journal of Financial and Quantitative Analysis, 31(4): 357-375.
  30. Kryzanowski, L. and H. Zhang, 1993. Market behaviour around canadian stock-split ex-dates. Journal of Empirical Finance, 1(1): 57-81
  31. Lakonishok, J. and B. Lev, 1987. Stock splits and stock dividends: Why, who, and when. Journal of Finance, 42(4): 913-932.
  32. Lamoureux, C.G. and P. Poon, 1987. The market reaction to stock splits. Journal of Finance, 42(5): 1347-1370.
  33. Li, Q., H. Sun and S.E. Ong, 2006. REIT splits and dividend changes: Tests of signaling and information substitutability. Journal of Real Estate Finance and Economics, Available at SSRN: http://ssrn.com/abstract=819746, 3(2): 127 - 150.
  34. Lin, J.-C., A.K. Singh and W. Yu, 2009. Stocksplits, trading continuity, and the cost of equity capital. Journal of Financial Economics, 93(3): 474-498.
  35. McNicholas, M. and A. Dravid, 1990. Stock dividends, stock splits and signaling. Journal of Finance, 45(3): 857-880.
  36. Mukhreji, S., Y. Lee and Y. Kim, 1996. The demise of stock splits in Korea. International Journal of Finance, 8(4): 338-351.
  37. Muscarella, C. and M. Vetsuypens, 1996. Stock splits: Signaling or liquidity? Solo-splits. Journal of Financial Economics, 42(1): 3 -26.
  38. Ofer, A.R. and D.R. Siegel, 1987. Corporate financial policy, information, and market expectations. Journal of Finance, 42(4): 889-911.
  39. Peterson, D.R. and P.P. Peterson, 1992. A further understanding of stock distributions: The case of reverse stock splits. Journal of Financial Research, 15(3): 189-205.
  40. Woolridge, J.R. and D.R. Chambers, 1983. Reverse splits and shareholder wealth. Financial Management, 12(3): 5-15.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

Competing Interests:

Acknowledgement:


Related Article

( 1 ) Reminiscing Stock Splits Announcement: A Malaysian Case
( 2 ) Testing the Random Walks in Korea Stock Exchange
( 3 ) Kashmir Peasant Economy under Dogra’s: A Case Study of Agrarian Produce and Livestock 1885-1925 A.D
( 4 ) Driving Role of Institutional Investors in the Indian Stock Market in Short and Long-Run – An Empirical Study
( 6 ) Testing the Random Walk: The Case of Hong Kong Stock Exchange
( 7 ) Earnings Management and Stock Market Returns
( 8 ) Stock Market Performance and Economic Growth: Evidence from Nigeria Employing Vector Error Correction Model Framework
( 9 ) Stock Market Index Prediction with Neural Network during Financial Crises: A Review on Bist-100
( 10 ) The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange
( 11 ) Studying the Integration of Damascus Securities Exchange with Selected Stock Markets
( 12 ) Does Gold Price Lead or Lags Islamic Stock Market and Strategy Commodity Price? A Study from Malaysia
( 13 ) The Effect of Internal and External Factors of Companies on Profitability and its Implications on Stock Price Index of State-Owned Banks
( 14 ) Regime Changes in the Volatility of Stock Markets
( 15 ) Optimal Stock Portfolio Issuers of Building Construction Registered in LQ45 Based on the Markowitz Approach
( 18 ) Importance of Corporate Governance Quality and Voluntary Disclosures of Corporate Governance Information in Listed Malaysian Family Controlled Businesses
( 20 ) Green Products Purchasing Among Malaysian Consumers
( 21 ) Share Options, Share Award and Firm’s Performance: Evidence from Malaysian Public Listed Companies
( 22 ) Confirming the Mediation Effect of A Structural Model By Using Bootstrap Approach: A Case Study of Malaysian 8th Grade Students’ Mathematics Achievement
( 24 ) Promoting Entrepreneurship through Open and Distance Education in Zimbabwe. A Case Study of the Zimbabwe Open University Students at Masvingo Regional Campus
( 25 ) Taylor Rule in The Context of Inflation Targeting: The Case of Tunisia
( 26 ) Geographical Starting Points the Analysis of Current Rural Problems in Montenegro: Case Study of Rural Local Community Kralje
( 29 ) Foreign Direct Investment (FDI) and Employment: A Case of Province of Punjab, Pakistan
( 30 ) Maternal Health-Care in India: The Case of Tetanus Toxoid Vaccination
( 31 ) Finance For Growth and Policy Options for Emerging and Developing Economies: The Case of Nigeria
( 32 ) Which Factors Affect Probability of Women Using Prenatal Care? The Case of Bangladesh
( 33 ) The Association Between Corporate Risk Disclosure and Firm Performance in Emerging Country – The Case of Egypt
( 34 ) Local Governance and Service Delivery in Zimbabwean Local Authorities: The Case of Harare and Masvingo Urban Municipalities
( 35 ) Promoting Local Acceptability of International Oil Companies (IOCS) Through Corporate Social Responsibility (CSR): The Case of Tullow Oil in Ghana
( 36 ) Challenges and Survival Strategies for Women in Small Scale Catering Business: A Case Study of Siyaso Magaba, Mbare
( 37 ) Attributes Influencing Strategic Alignment in the Service Sector: An Indonesian Banking Sector Case Study
( 38 ) Micro-Credits and Poverty Reduction in Dar-Es-Salaam, Tanzania: A Case Study of Dar-Es-Salaam Commercial Bank
( 39 ) An Empirical Test on Effect of Intra-Product Trade on Regional Income Distribution: The Case of Liaoning, China
( 40 ) Effects of Advertising on Consumer Behavior in Low Density Houses: The Case of Marlborough, Zimbabwe
( 41 ) An Assessment of the Impact of Information Communication Technology (ICT) On the Administration of Public Records: A Case Study of the Bolgatanga Municipal Assembly in the Upper East Region of Ghana-West Africa
( 42 ) An Empirical Study of the Impact of Metro Station Proximity on Property Value in The Case of Nanjing, China
( 43 ) Gender Analysis of Malnutrition: A Case Study of School-Going Children in Bahawalpur
( 44 ) The Representability of City Councils in Turkey: The Case of Kahramanmaras Province
( 45 ) Investigating the Demand of Small Hotel and Restaurant Businesses for Bank Financing: The Case of Turkey
( 46 ) A Review on EU Transportation Projects within the Case of Turkey for European Union Regional Development Policy
( 48 ) Forecasting-Based Carry Trade Using Pegged Currency: A Case of Omani Rial
( 49 ) A Theoretical Analysis Upon the Environmental Health and Justice Issue: A Case Study for a Comparison Between G20s Unitary and Federal Members
( 50 ) A Factor Analysis Approach Towards a Study of the Factors Affecting Students’ Choice of Higher Education Institution: A Case Study of a Private Institution (Twintech International University College of Technology)
( 51 ) The Impact of the Politics of Privatization and Commercialization of Public Enterprises in Nigeria on the Level of Productivity and Economic Viability: The Case of Alscon and Nitel
( 52 ) Effects of Environmental Satisfaction on Family Displacement Case Study: Gohar Dasht Region, Karaj City
( 53 ) Rice Farmer and Capital Formation: A Case Study of Rice Farmer's Credit Cooperative in Itoikin, Ikosi-Ejirin LCDA, Lagos State
( 54 ) Investment Climate Rating Evaluation: The Case of Ukrainian Economy
( 55 ) Interfaces Between Road Infrastructure and Poverty in Africa: The Case of Malawi, 1994-2013
( 56 ) National Security and Democratization in Nigeria: The Case of Insurgence
( 57 ) Internationalization of State Multilatinas: A Multi-Case Study in The Oil Sector
( 58 ) A Case Study of Local Government Implementation of the Ward Based Local Economic Development (LED) Program
( 59 ) An Evaluation of Effectiveness of Oversight Committees: A Case of City of Johannesburg, Section 79 Committees
( 60 ) An Investigation into the Causes of Failures in Railway Infrastructure at Transnet Freight Rail - A Case of the Steel and Cement Business Unit
( 61 ) Does Agricultural Sector Contribute to the Economic Growth in Case of Republic of Benin?
( 62 ) Investigate Airport Service Quality- A Case Study of Airports in Shanghai