Abstract:
The purpose of this study is to check whether stocks splits optimize the stock returns
and the risk associated with it. Using risk adjusted event study methodology, this
study got conducted on listed stocks of NYSE and BSE India in 5 windows created
at different intervals but within 15 days pre and post-split time. These windows are
separately checked on both the stock markets. For both the markets, it is observed
that stock splits are much frequent and those firms who are maintaining trust of its
investors are even able to transform its losses into profits while those who are not
maintaining trust of its investors continue to suffer losses but intensity of losses get
reduced in majority of cases due to trading range impact. Under that impact, more
investors jump to stocks of the company when stock prices move to acceptable range
of the investors.
