Market reaction of stock splits and stock dividends evidence from Ho Chi Minh stock exchange

Abstract

The first objective of this study is to develop the descriptive statistics of split and stock dividend at Vietnam from 2009 to 2012. The second objective is to test the effect of split or Stock Dividend announcement to the companies‟ stock price at HOSE by comparing the abnormal return of 14 days pre announcement and post announcement. Then study makes some explanations about the effect of split and stock dividend and gives some recommendations for both investors and manager of company in Hochiminh stock market.

The study used data of 124 split and stock dividend actions of stocks listed on Hochiminh Stock Exchange from 2009 to 2012 to test the hypothesis. Using the t-test statistics test the difference between the pre abnormal return and post abnormal return of 14 days surrounding the announcement days of 124 events.

With Mean = 0.00742529, Standard Deviation = 0.04023, Sig. = 0.042, the result of the test helps to conclude that split and stock dividend did bring a significant value for the companies and their shareholders.