Kapil Choudhary1 and Sakshi Choudhary2

1Department of Commerce, Chaudhary Devi Lal University, Sirsa – 125055, Haryana, India.
2Manohar Memorial College, Fatehabad – 125050, Haryana, India.
1E-mail: kapil_mgt1@yahoo.com, 2E-mail: sakshi_mgt1@yahoo.com

Abstract

Present study examines the stock return behaviour vis-à-vis stock splits in Indian context during the period from December 1999 to December 2007. It also makes an effort to disentangle the liquidity, trading range and neglected firm hypothesis. Consistent to earlier evidence, the study also documents the stock split announcement and execution effect in Indian context. The results regarding trading volume and daily turnover led to negation of improvement in liquidity after stock splits in India. The study could not corroborate the trading range hypothesis as possible explanation of stocks splits in India as majority of shares which split were trading at low market prices. While the neglected firm hypothesis could firmly be associated with the stock splits in India.

Keywords: Stock Splits, Event Study, Trading Range, Signaling.

>