Leadership Investigate

Dilemma Of Corporate Action: Empirical Evidences Of Bonus Issue Vs. Stock Split

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Executive Summary

Corporate action is usually believed to offer some good news to the investors, particularly in case of amalgamation and mergers. In many cases, corporate actions do not involve any potential future positive benefits to the company as is the case with bonus issue and stock splits. Such types of actions of the companies could be called as fictitious corporate actions. It has been noticed by many empirical studies that the market react positively to the announcement of bonus shares and stock splits.

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