The Effect of Stock Splits on Liquidity: Evidence from China

Q2 Business, Management and Accounting

Business Perspectives and Research Pub Date : 2023-02-19 DOI:10.1177/22785337221148823

Bilal Ahmad Pandow, Khurshid Ali Ganai

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Abstract

Despite many theories that explain the stock split announcement by companies, it has been viewed and aimed differently by corporate managers, regulators and investors. Many studies suggest stock splits are often used to lower the price and bring it to an acceptable trading range. However, few studies focus on emerging economies like China. The present study employs a market model to estimate aberrant volumes. Cumulative abnormal volumes and buy-and-hold abnormal volume estimations were used in accordance with a long-term event study. It was found that after firms have gone for stock splits, their liquidity has increased. Thereby suggesting that there is a significant influence on the post-split liquidity as was found in case of the firm that have gone for stock splits listed on China’s Shanghai Stock Exchange during the select period. Also, a statistically significant upward trend was also observed following the split by the firms. Study findings can be useful to regulators, managers, and investors per their interests. This paper has a limitation of using market model. Future research could also increase the time period and the number of firms that this paper has analyzed.

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股票分割对流动性的影响：来自中国的证据

尽管有许多理论可以解释公司宣布拆股的原因，但公司经理、监管机构和投资者对拆股的看法和目的却有所不同。许多研究表明，股票分割通常被用来降低股价，使其达到一个可接受的交易范围。然而，很少有研究关注像中国这样的新兴经济体。本研究采用市场模型来估计异常量。根据一项长期事件研究，使用了累积异常量和买入并持有异常量估计。研究发现，公司进行股票分割后，其流动性有所增加。这表明，在选择期间在中国上海证券交易所上市的公司进行股票分割的情况下，对拆分后的流动性有显著影响。此外，在公司拆分后，也观察到统计上显着的上升趋势。研究结果对监管者、管理者和投资者的利益都是有用的。本文使用市场模型有一定的局限性。未来的研究还可以增加本文分析的时间段和企业数量。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Business Perspectives and Research Business, Management and Accounting-Business and International Management

CiteScore

5.00

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0.00%

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期刊介绍： Business Perspectives and Research (BPR) aims to publish conceptual, empirical and applied research. The empirical research published in BPR focuses on testing, extending and building management theory. The goal is to expand and enhance the understanding of business and management through empirical investigation and theoretical analysis. BPR is also a platform for insightful and theoretically strong conceptual and review papers which would contribute to the body of knowledge. BPR seeks to advance the understanding of for-profit and not-for-profit organizations through empirical and conceptual work. It also publishes critical review of newly released books under Book Review section. The aim is to popularize and encourage discussion on ideas expressed in newly released books connected to management and allied disciplines. BPR also periodically publishes management cases grounded in theory, and communications in the form of research notes or comments from researchers and practitioners on published papers for critiquing and/or extending thinking on the area under consideration. The overarching aim of Business Perspectives and Research is to encourage original/innovative thinking through a scientific approach.