Stock splits and reverse splits in the Brazilian capital market

Stock splits and reverse splits in the Brazilian capital market

PurposeThis study aims to evaluate the presence of abnormal returns due to stock splits or reverse stock splits in the Brazilian capital market context.Design/methodology/approachThe event study technique was used on data from 518 events that occurred in a 30-year period (1987–2016), comprising 167...

Full description

Saved in:
Bibliographic Details
Published in:Journal of Economics, Finance and Administrative Science Vol. 29; no. 58; pp. 277 - 293
Main Authors: Almeida, Daniel Werner Lima Souza de, Pimenta Júnior, Tabajara, Gaio, Luiz Eduardo, Lima, Fabiano Guasti
Format: Journal Article
Language:English
Published: Lima Emerald Group Publishing Limited 11-10-2024
Emerald Publishing
Subjects:
Abnormal returns
Capital markets
Efficiency
Efficient markets
Emerging markets
Fama, Eugene
Hypotheses
Investment strategies
Investments
Investors
Market efficiency
Options markets
Reverse stock split
Securities markets
Statistical significance
Stock prices
Stock split
Volatility
Brazil
Latin America
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:PurposeThis study aims to evaluate the presence of abnormal returns due to stock splits or reverse stock splits in the Brazilian capital market context.Design/methodology/approachThe event study technique was used on data from 518 events that occurred in a 30-year period (1987–2016), comprising 167 stock splits and 351 reverse stock splits.FindingsThe results revealed the occurrence of abnormal returns around the time the shares began trading stock splits or reverse stock splits at a statistical significance level of 5%. The main conclusion is that stock split and reverse stock split operations represent opportunities for extraordinary gains and may serve as a reference for investment strategies in the Brazilian stock market.Originality/valueThis study innovates by including reverse stock splits, as the existing literature focuses on stock splits, and by testing two distinct “zero” dates that of the ordinary general meeting that approved the share alteration and the “ex” date of the alteration, when the shares were effectively traded, reverse split or split.
ISSN:2077-1886
2077-1886
DOI:10.1108/JEFAS-08-2021-0168