Reverse splits in international stock markets: Reconciling the evidence on long-term returns

Adam Zaremba , Szymon Okoń , Roman Asyngier , Lucia Schroeter

Abstract

Do firms conducting reverse splits underperform or overperform in the long run? To resolve this question we investigate the long-term returns following more than 5000 reverse splits conducted in 24 developed equity markets between the years 1990 and 2016. Using the calendar-time portfolio approach, we demonstrate that reverse splits lead to subsequent underperformance, except for microcaps in the sample. This phenomenon is present in all the global regions we examined—North America, Europe, and Asia-Pacific—and is robust to many considerations.
Author Adam Zaremba (WZ / KIiRK)
Adam Zaremba,,
- Department of Investment and Capital Markets
, Szymon Okoń - Szkoła Główna Handlowa w Warszawie (SGH), MNiSW [80]
Szymon Okoń,,
-
, Roman Asyngier - Maria Curie-Sklodowska University in Lublin (UMCS)
Roman Asyngier,,
-
, Lucia Schroeter - University of Dubai, UAE
Lucia Schroeter,,
-
Journal seriesResearch in International Business and Finance, ISSN 0275-5319, e-ISSN 1878-3384, (N/A 100 pkt)
Issue year2019
Vol47
Pages552-562
Publication size in sheets0.5
Keywords in EnglishReverse split, Share consolidation, Long-Run returns, International markets, Long-Term event study, Penny stocks, Micro-Caps
ASJC Classification1401 Business, Management and Accounting (miscellaneous); 2003 Finance
DOIDOI:10.1016/j.ribaf.2018.10.001
URL https://www.sciencedirect.com/science/article/abs/pii/S027553191830597X
Languageen angielski
Score (nominal)100
Score sourcejournalList
ScoreMinisterial score = 100.0, 15-04-2020, ArticleFromJournal
Publication indicators WoS Citations = 0; Scopus SNIP (Source Normalised Impact per Paper): 2018 = 1
Citation count*1 (2020-06-25)
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* presented citation count is obtained through Internet information analysis and it is close to the number calculated by the Publish or Perish system.
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