Article1992

A FURTHER UNDERSTANDING OF STOCK DISTRIBUTIONS: THE CASE OF REVERSE STOCK SPLITS

David R. Peterson · Pamela Parrish Peterson

58 citations0/0 files storedThe Journal of Financial Research

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Financial Markets and Investment Strategies Corporate Finance and Governance Financial Analysis and Corporate Governance

Abstract

Abstract In this study we analyze reverse stock splits and demonstrate that the total risk of returns to reverse splitting securities declines after the split, yet systematic risk remains essentially unchanged. In general, securities have negative abnormal stock returns at reverse split announcements, though smaller companies have stronger negative reactions. Companies forced to reverse split have positive wealth effects.

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References

1977Estimating betas from nonsynchronous data 1984The valuation effects of stock splits and stock dividends 1987Stock Splits and Stock Dividends: Why, Who, and When 1987The Market Reaction to Stock Splits 1990Stock Dividends, Stock Splits, and Signaling 1988Stock splits, stock prices, and transaction costs 1985Volatility increases subsequent to stock splits: An empirical aberration 1990An Empirical Analysis of Common Stock Delistings

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2008Return Performance Surrounding Reverse Stock Splits: Can Investors Profit?2007The performance of stocks that are reverse split 1997The effect of Canadian stock splits, stock dividends, and reverse splits on the value of the firm 2007DOES VOLATILITY DECREASE AFTER REVERSE STOCK SPLITS?1997On Existence of An "Optimal Stock Price": Evidence from Stock Splits and Reverse Stock Splits in Hong Kong 2000Rationality of Stock Splits: The Target-Price Habit Hypothesis

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