Predicting stock splits with the help of firm-specific experiences.

Evidence exists of abnormal stock returns at and following stock split announcements. The successful prediction of splits may therefore enhance investor returns, yet few studies attempt such forecasts. We note a neglected aspect of prior prediction studies—that companies enjoying a favorable stock market response to a previous split are more likely to split again. Firms in industries with a record of favorable post-split performance may also be more likely to split. We find that inclusion of these factors enhances split prediction accuracy. We also find that with these factors our split prediction model generates significant abnormal returns. [ABSTRACT FROM AUTHOR]

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