History and research
In 1969 Eugene Fama, Lawrence Fisher, Michael Jensen and Richard Roll studied how prices reacted to stock splits—the birth of the event study, now a standard tool of finance. In 1996 Ikenberry and colleagues found splitting firms beat the market by about 8% in the year after announcement, supporting the view that splits signal management confidence.
Notable cases
In 2018 Samsung Electronics, trading above 2.5 million won, split 50-for-1, cutting par value from 5,000 to 100 won and bringing the price to around 50,000 won within reach of retail investors. Apple (4:1) and Tesla (5:1) split in 2020 and Nvidia (10:1) in 2024. Market cap stays the same while EPS shrinks in proportion.
Versus bonus issues and reverse splits
A bonus issue also adds shares but capitalizes reserves; a split simply divides par value. A reverse split merges shares when the price is very low, often to meet listing requirements.
FAQ
- Do splits raise share prices?
- In theory value is unchanged, but improved liquidity and the confidence signal have often lifted prices.
- Can I trade during a split?
- In Korea trading may be suspended for a few days until the new shares list.
Sources reviewed: 2026-10-26
References
- Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The adjustment of stock prices to new information. International Economic Review, 10(1), 1–21.
- Ikenberry, D. L., Rankine, G., & Stice, E. K. (1996). What do stock splits really signal? Journal of Financial and Quantitative Analysis, 31(3), 357–375.
- 삼성전자. (2018). 주식분할 결정 공시 (2018.1.31).