Corporate Actions and the Manipulation of Retail Investors in China: An Analysis of Stock Splits / Sheridan Titman, Chishen Wei. Wei, Bin Zhao.

Format:

Book

Author/Creator:

Titman, Sheridan.

Contributor:

National Bureau of Economic Research.

Wei, Chishen.

Zhao, Bin (Researcher on behavioral finance and stock markets)

Series:

Working Paper Series (National Bureau of Economic Research) no. w29212.

NBER working paper series no. w29212

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

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 pre-split 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 post-split 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.

Notes:

Print version record

September 2021.