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- Title
Stock Splits and Stock Dividends: Why, Who, and When.
- Authors
LAKONISHOK, JOSEF; LEV, BARUCH
- Abstract
This study investigates empirically why firms split their stock or distribute stock dividends and why the market reacts favorably to these distributions. The findings suggest that stock splits are mainly aimed at restoring stock prices to a "normal range." Some support can also be found for the oft-mentioned signalling motive of stock splits. Stock dividends are altogether different from stock splits, and they appear to be a decreasing phenomenon. The clue to stock dividend distributions may lie in their perceived substitution for relatively low cash dividends.
- Subjects
STOCK research (Finance); STOCK splitting; DIVIDENDS; FINANCIAL markets; DISTRIBUTION (Economic theory); SECURITIES trading; STOCK prices; PRICES of securities; CORPORATE finance; FINANCIAL market reaction; FINANCIAL performance; EARNINGS per share
- Publication
Journal of Finance (Wiley-Blackwell), 1987, Vol 42, Issue 4, p913
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1987.tb03919.x