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Abnormal Returns and Stock Splits: The Decimalized vs. Fractional System of Stock Price Quotes

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Author(s): Carroll Howard Griffin

Journal: International Journal of Business and Management
ISSN 1833-3850

Volume: 5;
Issue: 12;
Date: 2010;
Original page

ABSTRACT
Stock splits have been an anomaly in the world of finance since their inception. Despite the fact that stock splitsthemselves do not inherently create any value for the firm, investors see stock splits as positive and thecompanies that declare them as better investments than ones that do not. With the inception several years ago ofthe decimalized system of stock price quotations, it remains to be seen if stock splits will continue to be seen assuch, and if so, to a greater or lesser degree as under the fractional quote system. It seems that despite a reductionin transaction costs under the new system, there again appears to be no long-term benefit to splitting.
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