Publication Type
Journal Article
Version
publishedVersion
Publication Date
9-2022
Abstract
We identify a group of “suspicious” firms that use stock splits, perhaps along with other activities, to artificially inflate their share prices. Following the initiation of suspicious splits, share prices temporarily increase, and subsequently decline below their presplit levels. Using account level data from the Shanghai Stock Exchange, we find that small retail investors acquire shares in firms initiating suspicious splits, while more sophisticated investors accumulate positions before suspicious split announcements and sell in the postsplit period. We also find that insiders sell large blocks of shares and obtain loans using company stock as collateral around the initiation of suspicious splits.
Keywords
Stock market manipulation, stock splits, China
Discipline
Finance and Financial Management
Research Areas
Finance
Publication
Journal of Financial Economics
Volume
145
Issue
3
First Page
762
Last Page
787
ISSN
0304-405X
Identifier
10.1016/j.jfineco.2021.09.018
Publisher
Elsevier
Citation
TITMAN, Sheridan; WEI, Chi Shen; and ZHAO, Bin.
Corporate actions and the manipulation of retail investors in China: An analysis of stock splits. (2022). Journal of Financial Economics. 145, (3), 762-787.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7076
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
External URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3569429
Additional URL
https://doi.org/10.1016/j.jfineco.2021.09.018
Comments
Forthcoming