摘要：Stock splits are cosmetic events that do not impact the underlying cash flows of thefirm. The current literatures tend to explain the motivation of stock splits into two categories:signaling the firm’s future profitability and increasing the stock’s liquidity. In this paper,principal component analysis is used to examine the cumulative abnormal returns and tradingvolumes before and after split. The tests show the signaling and liquidity motivation countfor 93.87% of the total variance. This result would question the most current literatures whichmodel the stock splits using a single motivation model. In addition, the study finds thatindustry factor may have an impact on firms’ stock split decisions: companies in similarindustries tend to show similarity in splits.
关键词：stock split; signal; liquidity; principal component analysis
