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We investigate CEOs who combine insider selling with stock splits, which is suspicious, because dumping stocks is inconsistent with the positive stock-split signal. Our empirical results indicate that, compared with other splits, these mixed-signal splits perform poorly and are followed by much lower buy-and-hold abnormal returns and much higher likelihoods of announcing an earnings restatement and CEO turnover in the post-split period. Our results are robust to entropy balancing and controlling for CEO characteristics, incentives, and corporate governance and highlight previously ignored agency issues around stock splits. Attention to insider trades is essential to properly interpret a stock-split signal.


This is the peer reviewed version of the following article:

Elnahas, A. M., Jain, P., & McInish, T. H. (2021). Mixed-signal stock splits. J Bus Fin Acc, 1– 29. which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

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Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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J Bus Fin Acc



Available for download on Monday, October 02, 2023

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