We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
Return Performance Surrounding Reverse Stock Splits: Can Investors Profit?
- Authors
Seoyoung Kim; Klein, April; Rosenfeld, James
- Abstract
We examine the long-run return performance of over 1,600 firms with reverse stock splits. These stocks record statistically significant negative abnormal returns over the three-year period following the month of the reverse split. The sample firms experience poor operating performances over the four years that include and follow the year of the reverse split, which suggests informational inefficiencies. Because these stocks have unique financial characteristics, we also show that they would be very difficult to sell short. Thus, arbitrageurs would be restricted in their ability to earn abnormal profits, even if they correctly anticipated a price decline.
- Subjects
STOCK splitting; SHORT selling (Securities); LONG run (Economics); STOCK price forecasting; STOCK prices; STOCKS (Finance)
- Publication
Financial Management (Wiley-Blackwell), 2008, Vol 37, Issue 2, p173
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/j.1755-053X.2008.00009.x