Economics, Econometrics and Finance
7 years ago

Institutional investors flock to stocks post-split, boosting liquidity and information flow.

Pacific-Basin Finance Journal
Institutional ownership around stock splits
LI Feng-yu, Mark H. Liu, Yongdong Shi

Paper Summary

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The study looked at why companies do stock splits. Some say it's to show good news, others say it's to make trading easier. By checking how much big investors own before and after a split, they found that short-term big investors buy more after a split. This is especially true for less popular stocks. This shows that stock splits are more about making trading easier than showing good news.