What the study found
Stock splits generally had a positive effect on stock returns in the Indonesia Stock Exchange during 2022-2023, while reverse stock splits had a negative effect.
Why the authors say this matters
The authors conclude that stock splits can be read as positive signals about a company’s future performance, while reverse stock splits are often interpreted as signs of possible financial or operational problems. The study suggests that understanding these market reactions can support more informed decisionmaking for managers, investors, and regulators in emerging markets such as Indonesia.
What the researchers tested
The researchers studied stock splits and reverse stock splits around their effective dates in the Indonesia Stock Exchange during 2022-2023. They used an event study method and measured cumulative abnormal return (CAR), which compares actual returns with expected returns, over a 10-day window before and after the corporate action.
What worked and what didn't
For stock splits, CAR increased significantly before the effective date, which the authors describe as a favorable investor reaction. For reverse stock splits, CAR declined sharply on and after the effective date. The abstract reports these patterns as general effects, but does not provide additional detail on individual firms or exceptions.
What to keep in mind
The available summary does not describe detailed limitations beyond the study period, market, and 10-day event window. The findings are specific to the Indonesia Stock Exchange during 2022-2023.
Key points
- Stock splits were generally associated with positive stock returns in the Indonesia Stock Exchange.
- Reverse stock splits were generally associated with negative stock returns.
- Cumulative abnormal return (CAR) rose significantly before stock split effective dates.
- CAR fell sharply on and after reverse stock split effective dates.
- The study used an event study approach with a 10-day window before and after the corporate action.
Disclosure
- Research title:
- Stock splits and reverse splits had opposite return effects in Indonesia
- Authors:
- I Made Suidarma, Ni Wayan Okta Prasetya Putri, Putu Ayu Suan Dewi, I Kadek Krisna Ari Putra, I Made Sara, I Dewa Nyoman Marsudiana
- Institutions:
- University of National Education
- Publication date:
- 2026-03-08
- OpenAlex record:
- View
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