Share price reaction to stock split: A study on companies listed in S&P 500
Omkar Pawar, Pratik Jaju, Nisha Prasad, Prithika Kharwar, Nischay Abad
The US Economy, one among the most developed economies in the world, has witnessed new heights in the US equity markets due to the recent earnings of the US companies, which has lured the investors both domestic and foreign to show keen interest in making investments in the US equities. Investors react to any corporate actions explicitly, which play a vital role in the fluctuations of share prices. Various studies so far have proved that the behavior of the investing community towards stock splits differ according to the interpretations given about the present and future prosperity of the stocks in the respective nations. An attempt has been made in this study, to analyze the behavior of the share prices in the US equity market towards the announcements of stock splits, taking into account the price movements of the S&P 500 stocks that have announced stock splits and to find out the impact of the price behavior by comparing the stock performance with the performance of the market index.