Tuesday, January 03, 2006

Are Stock Splits Good ?

I have never been a big fan of stock splits but the data out of the University of Illinois is compelling for at least me to reconsider my anti-stock split mentality.

"David Ikenberry of the University of Illinois in Champaign found that stocks rose 3.5 percent in the trading session following a split announcement, and gained another 9 percentage points more than similar stocks in the next year. The average number of shareholders in a company rose 20 percent in the 12 months after a split, according to a 2004 paper by Ravi Dhar and William Goetzmann of the Yale School of Management and Ning Zhu of the University of California at Davis."

No matter how you feel about stock splits; the article from Bloomberg is an interesting read.


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