by. PaulAsquith;PaulHealy;KrishnaPalepu
The Accounting Review, Vol.64,No.3.(Jul.,1989), pp.387-403.
Abstract
This paper examines whether stock split convey information about earnings. The result indicates that firms split their shares after a significant increase in earnings. Before the stock split announcement, the market expects these earnings increases to be temporary. The split announcement leads investors to increase their expectations that the past earnings increases are permanent. The evidence also suggest that the market's reaction to split announcements cannot be attributed to expectations of either future earnings increases or near term cash dividend increases.
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