AN IMPACT OF STOCK SPLIT ANNOUNCEMENT AND STOCK SPLIT EVENT ON SELECTED COMPANIES’ SHARE PRICE

AN IMPACT OF STOCK SPLIT ANNOUNCEMENT AND STOCK SPLIT EVENT ON SELECTED COMPANIES’ SHARE PRICE

Authors

  • PRATIK PRAVIN

Keywords:

To know about splitting of share, To find out the impact of stock splits announcement on its stock price, To analyze the stock split impact on selected stock‟s price, To find the abnormal change during the splittingIntroduction

Abstract

Stock split includes the technique of psychological pricing where new prices are more attractive to the incoming new investors as well as to the existing shareholder. Knowledge of share prices and its movement enables investors to choose the companies in which to invest wisely. The objective of this study is to investigate the effect of stock and their abnormal return of selected companies listed at the BSE. This research is based on an event study methodology. Stock‟s abnormal return was investigated for a period of 7 days before and after of stock split date. The study covered the period of 2018-19 to 2019-20 with a sample size of 5 companies. Secondary data collected from bseindia.com and moneycontrol.com on the daily stock prices of the 5 companies and the BSE Sensex index for 7 day pre and 7 day post-split announcement date and date of split event was used. In conclusion of this research, stock split announcements leads to getting negative returns at some place that helps to predicting the future returns  and market efficiency. But at the time of stock splitting it shows positive impact on stock price which means stock splits is helpful for getting abnormal return to investors.

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References

Articles

Koustubh Kanti and Ray (2011). Market reaction to bonus issue and stock split in India. The IUP Journal of Applied Finance.

Deborah A Ford, Hoang H Nguyen and Vat T Nguyen (2012). Analyst coverage andmarket reaction around stock split announcement. Taylor & Francis Journals AppliedFinancial Economics.

Saraswathi Thirunellai and shreenivas Kunte (2013). Stock splits: reasons and valuation effects. Sodhganga

Websites

https://www.moneycontrol.com

https://www.bseindia.com

Additional Files

Published

10-05-2020

How to Cite

PRATIK PRAVIN. (2020). AN IMPACT OF STOCK SPLIT ANNOUNCEMENT AND STOCK SPLIT EVENT ON SELECTED COMPANIES’ SHARE PRICE. Vidhyayana - An International Multidisciplinary Peer-Reviewed E-Journal - ISSN 2454-8596, 5(5). Retrieved from https://vidhyayanaejournal.org/journal/article/view/634
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