Stock splits and bond yields: Isolating the signaling hypothesis

Michayluk, D; Zhao, R

Stock splits and bond yields: Isolating the signaling hypothesis

Michayluk, D

Zhao, R

Permalink

Publication Type:: Journal Article
Citation:: Financial Review, 2010, 45 (2), pp. 375 - 386
Issue Date:: 2010-01-01

Closed Access

	Filename	Description	Size
	2008008174OK.pdf		245.32 kB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Michayluk, D https://orcid.org/0000-0001-9020-0855	en_US
dc.contributor.author	Zhao, R https://orcid.org/0000-0002-1223-3333	en_US
dc.date.issued	2010-01-01	en_US
dc.identifier.citation	Financial Review, 2010, 45 (2), pp. 375 - 386	en_US
dc.identifier.issn	0732-8516	en_US
dc.identifier.uri	http://hdl.handle.net/10453/15822
dc.description.abstract	One explanation offered for stock splits is that the split signals positive information by reducing the stock price range in expectation of improved future prospects. Price declines also lead to changes in stock price dynamics, but related securities are not subject to these other changes and therefore can be used to provide a separate assessment of the markets’ interpretation of the split. We examine corporate bond issues around stock splits and find a significant decline in the bond yield spread following stock splits, supporting the signaling hypothesis. We also confirm improvements in forecasted and realized earnings subsequent to stock splits. © 2010, The Eastern Finance Association.	en_US
dc.relation.ispartof	Financial Review	en_US
dc.relation.isbasedon	10.1111/j.1540-6288.2010.00252.x	en_US
dc.title	Stock splits and bond yields: Isolating the signaling hypothesis	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	45	en_US
utslib.for	150201 Finance	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	closed_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	45	en_US

Abstract:

One explanation offered for stock splits is that the split signals positive information by reducing the stock price range in expectation of improved future prospects. Price declines also lead to changes in stock price dynamics, but related securities are not subject to these other changes and therefore can be used to provide a separate assessment of the markets’ interpretation of the split. We examine corporate bond issues around stock splits and find a significant decline in the bond yield spread following stock splits, supporting the signaling hypothesis. We also confirm improvements in forecasted and realized earnings subsequent to stock splits. © 2010, The Eastern Finance Association.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/15822