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Who benefits from share splits?
South African Journal of Business Management | Vol 17, No 2 | a1039 |
DOI: https://doi.org/10.4102/sajbm.v17i2.1039
| © 2018 T. A. Cross, C. Firer
| This work is licensed under CC Attribution 4.0
Submitted: 22 October 2018 | Published: 30 June 1986
Submitted: 22 October 2018 | Published: 30 June 1986
About the author(s)
T. A. Cross, Graduate School of Business Administration, University of the Witwatersrand, South AfricaC. Firer, Graduate School of Business Administration, University of the Witwatersrand, South Africa
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The objective of this study was to carry out an investigation into the excess return behaviour of companies on the Johannesburg Stock Exchange which split their shares in the period 1972 - 1984. The concept of an event study was used in the analysis. Positive average residuals were observed in the months leading up to the split. In the month of the split large average excess returns were displayed. However, no long-term favourable effects on share price were found. Splits appeared to be a reaction to a sustained period of above-average returns rather than the cause of such returns. The splitting of a company's shares does not appear to influence the share's rand value traded.
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