scholarly journals Reverse Stock Splits: The Fiduciary's Obligations under State Law

1975 ◽  
Vol 63 (5) ◽  
pp. 1226
Author(s):  
Michael J. Lawson
Keyword(s):  
Stock Splits ◽  
State Law ◽  
Reverse Stock Splits

Numerosity: Forward and Reverse Stock Splits

2019 ◽  
Vol 21 (3) ◽  
pp. 323-335
Author(s):  
Jessica West ◽  
Carol Azab ◽  
K. C. Ma ◽  
Michael Bitter
Keyword(s):  
Stock Splits ◽  
Reverse Stock Splits

Multiple reverse stock splits (investors beware!)

2013 ◽  
Vol 39 (2) ◽  
pp. 357-369 ◽  
Author(s):  
Claire E. Crutchley ◽  
Steven Swidler
Keyword(s):  
Stock Splits ◽  
Reverse Stock Splits

Reverse Stock Splits in the Biotechnology Industry: An Effectuation Approach

2015 ◽  
Vol 21 (1) ◽  
Author(s):  
Wei Wu ◽  
Robert Couch ◽  
Yulianto Suharto ◽  
Mark J. Ahn
Keyword(s):  
Abnormal Returns ◽  
Biotechnology Industry ◽  
Stock Splits ◽  
Firm Age ◽  
Split Ratio ◽  
Ratio Size ◽  
Reverse Stock Splits ◽  
Biotech Industry ◽  
Reverse Stock Split

Using an effectuation theory lens, we study reverse stock splits in the biotech industry where significant uncertainty makes specific scenarios of success difficult to predict. We conjecture and find that, in contrast to other environments where there is less uncertainty, reverse stock splits in the biotech industry are followed by positive abnormal returns over the subsequent 1- to 12-months. Also consistent with our effectuation-based predictions, we find that these returns are positively related to the reverse split ratio, size, cash holding, and long-term debt, and negatively related to the market-to-book ratio and firm age. We also find that liquidity increases after a reverse stock split. These results suggest that the concept of effectuation theory is better suited to analyzing reverse stock splits in the biotech industry. 

scholarly journals Normal and reverse stock splits in the V4 countries

2016 ◽  
Vol 13 (4) ◽  
pp. 95-105 ◽  
Author(s):  
Manuela Raisová ◽  
Martin Užik ◽  
Christian M. Hoffmeister
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Stock Price ◽  
Abnormal Returns ◽  
Stock Splits ◽  
Announcement Date ◽  
Reverse Stock Splits ◽  
Stock Split ◽  
Reverse Stock Split ◽  
A Company

The economic crisis has forced managers of joint stock companies to look for short-term solutions for the sharp changes in stock prices of their companies. Even the companies of the V4 countries are not the exception. The authors have focused on those companies where have been used either reverse stock split or stock split. They analyzed the effects of the reverse stock split or stock splits on the abnormal returns of stocks. In this paper, the authors analyzed a dataset from 1993 until 2015 with 124 reverse stock splits and 184 stock splits in total focused on the stock market in V4. Based on their own research they conclude that when reverse stock splits were used stock returns significantly decreased one day around the announcement date. They conclude that managers of a company might use this instrument to move the stock price back to the optimal trading range outside of the penny stock area. In the case of stock splits, the authors concluded that the use of this tool results in a significant increase in the returns of a stock after the announcement date. However, the results are in contrast to some former studies which found no positive effect on the returns caused by stock splits. The authors conclude that managers of a company might use this instrument to transport information content of future (positive) performance of a company to the traders. Keywords: Vysegrad group countries, normal stock split, reverse stock split, abnormal returns. JEL Classification: G11, G23, G32

scholarly journals Earnings management and long-term performance: evidence from reverse stock splits

2009 ◽  
Vol 7 (2) ◽  
pp. 420-439
Author(s):  
Michael Gombola ◽  
Amy Yueh-Fang Ho ◽  
Yi-Kai Chen
Keyword(s):  
Earnings Management ◽  
Balance Sheet ◽  
Abnormal Returns ◽  
Stock Splits ◽  
Reverse Stock Splits ◽  
Managerial Optimism ◽  
Reverse Stock Split ◽  
Term Performance

This study investigates earnings management and long-term stock performance surrounding reverse stock splits. It is designed to provide evidence on the role of managerial pessimism and discretionary current accruals. Discretionary current accruals are used to measure earnings management. These discretionary current accruals are measured in our study using the balance sheet approach as well as the cash flow statement approach. We find consistent evidence of negative discretionary current accruals prior to reverse stock splits. Such negative discretionary accruals are consistent with managerial pessimism prior to a reverse stock split. Such pessimism is warranted by the observed negative market reaction to a reverse split announcement and the negative abnormal returns observed after reverse splits. Negative discretionary current accruals are also consistent with smoothing of earnings during difficult and challenging periods for the firm. Our study might provide an alternative to the opportunism explanation. It also provides additional evidence buttressing the role of managerial optimism and pessimism in explaining earnings management.

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