Impact of Stock Splits on Stock Returns and Liquidity of the Selected Firms : A Study from NSE

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Authors

  • K. P. Hemanth Kumar
     Institute of Management Studies, Shivagangothri, Davangere University ,IN
  • R. Shashidhar
     Institute of Management Studies, Shivagangothri, Davangere University ,IN
  • P. Paramashivaiah
     Dept. of Studies & Research in Commerce & Management Studies, Tumkur University, Tumkur 572103 ,IN

DOI:

https://doi.org/10.18311/jmmf/2022/32043

Keywords:

Stock Splits, Abnormal Return, Liquidity and Derivatives.

Abstract

Stock splits are used as a tool to bring down the current share price in a market in order to attract all kinds of investors in the market and to make it affordable especially to the small investors. During this course it is not expected to gain any abnormal returns but practically it will most of the times as it supports the signaling hypothesis theory. Corporate actions are just cosmetic events where do not have any impact on firms investments or capital structure, so there is a scope for analyzing the impact of splits on the shareholders return. The purpose of this paper is to evaluate the abnormal returns and to analyze the changes in the liquidity position of the pre-split and post-split announcement. Study has considered 10 samples which are gone for stock splits during the year 2016-2020 and also should be trading under Nifty 50 and derivative segment too. The results were highlighting that the spot market and derivative markets are correlated and moves parallel but just immediately after the spot is near month contract; there it is observed that there is a negative abnormal returns on the event announcement day where investors were not able to cope up the information rapidly.

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Published

2022-12-08

How to Cite

Hemanth Kumar, K. P., Shashidhar, R., & Paramashivaiah, P. (2022). Impact of Stock Splits on Stock Returns and Liquidity of the Selected Firms : A Study from NSE. Journal of Mines, Metals and Fuels, 70(8A), 207–214. https://doi.org/10.18311/jmmf/2022/32043

Issue

Volume 70, Issue 8A, August 2022

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

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