ABSTRACT
Stock splits by corporations are a common occurrence. It has been estimated that five to ten percent of all AMEX and NYSE firms split their stock in a typical year, Lakonishok and Lev (1987). Although stock splits are merely an arithmetic exercise, announcements of stock splits generate abnormal positive returns to shareholders. Several studies find a significant positive reaction to split announcements; see for example Reilly and Drzycimski (1981), Ohlson and Penman (1985), Grinblatt, Masulis and Titman (1984), Lakonishok and Lev (1987), Lamoureux and Poon (1987), and Brennan and Hughes (1991).
