The market's response to recurring events The case of stock splits

Eugene Pilotte, Timothy Manuel

Research output: Contribution to journalArticlepeer-review

30 Scopus citations


A substantial body of literature suggests that stock splits convey information. In this paper we extend this literature by examining firms that split their stock at least twice during 1970-1988. We focus on firms with multiple splits to provide evidence on the market's use of previous split experience in interpreting a recurring event. Our major findings are that stock price responses to both stock splits and post-split earnings changes depend on earnings realizations observed after previous splits. These findings support the conclusion that the market uses previous split experience to interpret a recurring event.

Original languageEnglish
Pages (from-to)111-127
Number of pages17
JournalJournal of Financial Economics
Issue number1
StatePublished - May 1996


  • Earnings information
  • Price response
  • Stock splits


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