REIT Stock Splits and Liquidity Changes |
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| Authors: | Gow-Cheng Huang Kartono Liano Ming-Shiun Pan |
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| Affiliation: | (1) Department of Accounting and Finance, Alabama State University, Montgomery, AL 36101, USA;(2) Department of Finance and Economics, Mississippi State University, Mississippi State, MS 39762, USA;(3) Department of Finance and Supply Chain Management, Shippensburg University, Shippensburg, PA 17257, USA |
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| Abstract: | This study examines the motive of stock splits made by REITs. We find that REIT liquidity increases after the split announcement. However, the increase in liquidity is limited to days around the split announcement. After the ex-date, the liquidity tends to revert back to the pre-split level. We find that the positive market reaction around the announcement date is positively related to the change in short-term liquidity but not to the change in long-term liquidity. The announcement effect is also not correlated with future changes in operating performance. Overall, our results suggest that REITs split their share to attract investors’ attention rather than to signal or to improve trading liquidity in the long run. |
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