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Subject:
Stock Splits
Category: Business and Money > Finance Asked by: salevene-ga List Price: $5.00 |
Posted:
12 Feb 2005 16:23 PST
Expires: 14 Mar 2005 16:23 PST Question ID: 473529 |
I'm interested in purchasing a stock that is going to split within the next month (2 for 1 shares). I was wondering if there was any research out there on the effect of a split before it happens (and after). I was looking for some reasearch, if any, on what happens to the price of the stock. Thanks, |
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There is no answer at this time. |
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Subject:
Re: Stock Splits
From: siliconsamurai-ga on 13 Feb 2005 05:31 PST |
The stock usually goes up after the split takes place but I don't have any reference to offer. It's just one of those percentage plays stock market insiders usually try to take advantage of, like the fact that most stock market profits take place in just one half of the year. These things are statistically verified but they don't always work. |
Subject:
Re: Stock Splits
From: sqylogin-ga on 13 Feb 2005 05:38 PST |
In actual theory, stock splits should have zero effect. http://www.sec.gov/answers/stocksplit.htm But in the real world, prices usually go up. Stock splits increase the number of shares outstanding, and decrease the cost by a proportional amount. This makes the stock more affordable, and may possibly increase demand. http://www.rightline.net/home/tradingsplits.html Good luck. |
Subject:
Re: Stock Splits
From: siliconsamurai-ga on 13 Feb 2005 08:40 PST |
Another reason they tend to go up is because more people are willing to buy cheaper stocks - it's merely a psychological thing as alluded to by squlogin MOre importantly, companies which split are not only usually rising and have been doing so for a while, the board of directors obviously believes the value will continue to rise. |
Subject:
Re: Stock Splits
From: salevene-ga on 14 Feb 2005 08:03 PST |
Thans for the insight everyone, it is much appreciated. |
Subject:
Re: Stock Splits
From: olin_guru-ga on 16 Feb 2005 20:57 PST |
There is a paper by Ravi Dhar of Yale that talks about the effects of clientele changes before and after stock splits. This seems like relevant reference to use. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=410104 Hope this is useful. Good Luck. |
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