2017, 07 September
Which price is right?
The positive effect of stock splits has been a talking point for many years now, although there is limited academic research looking into the relationship between stock splits and the performance of listed real estate. Fama, Fisher, Jensen, and Roll showed in their 1969 study that markets are “efficient” enough to adjust to new information very rapidly and that positive drift caused by stock splits followed increased future dividend implications. Following simple rationale, an investor should be indifferent whether he owns 10 shares of €10 or one share of €100. But one can doubt the limited impact if we zoom out and take several trading-related factors into account that help determine the right price for a single share.
