Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Short- and Long-Term Effects of Stock Split Disclosure: Exploring Determinants

주식분할 공시에 대한 장·단기 효과: 결정요인 분석을 중심으로

  • Jin-Hwon Lee (Department of Business Management, Osan University) ;
  • Kyung-Soon Kim (Division of Business Administration College of Business, Chosun University)
  • Received : 2023.02.28
  • Accepted : 2023.03.25
  • Published : 2023.03.31
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Abstract

Purpose - The purpose of this study is to re-examine the disclosure effect of stock splits and long-term performance after stock splits using stock split data over the past 10 years, and infer the motivation (signal or opportunism) of stock splits. In addition, we focus on exploring the determinants of the short- and long-term market response to stock splits. Design/methodology/approach - We measure the short-term market response to a stock split and the long-term stock performance after the stock split announcement using the event study method. We analyze whether there is a difference in the long-term and short-term market response to a stock split according to various company characteristics through univariate analysis and regression analysis. Findings - In the case of the entire sample, a statistically significant positive excess return is observed on the stock split announcement date, and the excess return during the 24-month holding period after the stock split do not show a difference from zero. In particular, the difference between short-term and long-term returns on stock splits is larger in companies with a large stock split ratio, small companies, large growth potential, and companies with a combination of financial events after a stock split. Research implications or Originality - The results of this study suggest that at least the signal hypothesis for a stock split does not hold in the Korean stock market. On the other hand, it suggests that there is a possibility that a stock split can be abused by the manager's opportunistic motive, and that this opportunism can be discriminated depending on the size of the stock split, corporate characteristics, and financing plan.

Keywords

Acknowledgement

이 논문은 2019년 대한민국 교육부와 한국연구재단의 지원을 받아 수행된 연구(NRF-2019S1A5A8033605)이며, 일부는 조선대학교 학술연구비의 지원을 받아 연구되었음(2022)

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