摘要： The recent splits of AAPL and TSLA drew a lot of media attention. A common comment was “splits don’t change the stock fundamentals, so they shouldn’t affect valuation.”

▲圖片標題(來源：Phil Mackintosh)

The recent splits of AAPL and TSLA drew a lot of media attention. A common comment was “splits don’t change the stock fundamentals, so they shouldn’t affect valuation.”

But that’s not true. Splitting fundamentally changes how stocks trade. That can make it cheaper for investors, improving their returns. In turn, when investor returns increase, stock valuations should outperform.

In fact, seemingly small things like market structure and trading costs are important to the economy.

Splits help stocks trade higher

Quite a lot of academic research shows that stocks that split tend to outperform the market. We updated these studies with newer data. What we found was (still) a compelling case for stock splits.

Overall, large cap stocks that split outperform the market by an average of 5% over the next 12 months. Just announcing a split causes the average stocks to outperform the market by 2.5%, indicating the market expected gains even before tradability improves.

That’s consistent with academic research in 2009 that found that liquidity improvements following stock splits reduced average companies cost of equity capital by 17.3%, or 2.4 percentage-points per-annum. This is a material boost to both issuers and investors.

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