International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12

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 Volume 13, Issue 2 (February 2026), Pages: 229-239

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 Original Research Paper

The impact of stock splits and reverse stock splits on stock returns in the Indonesian market

 Author(s): 

I Made Suidarma *, Ni Wayan Okta Prasetya Putri, Putu Ayu Suan Dewi, I Kadek Krisna Ari Putra, I Made Sara, I Dewa Nyoman Marsudiana

 Affiliation(s):

Faculty of Economics and Business, Universitas Pendidikan Nasional, Denpasar, Indonesia

 Full text

    Full Text - PDF

 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0000-0002-7064-6304

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2026.02.024

 Abstract

This study examines the impact of stock splits and reverse stock splits on stock returns around their effective dates in the Indonesia Stock Exchange during the 2022–2023 period. The research applies an event study method and uses the cumulative abnormal return (CAR) approach to measure the difference between actual and expected returns within a 10-day window before and after the corporate action. The results show that stock splits generally have a positive effect on stock returns. CAR increases significantly before the effective date, suggesting a favorable reaction from investors. In contrast, reverse stock splits have a negative effect, as CAR declines sharply on and after the effective date. These findings indicate that stock splits are viewed as positive signals about a company’s future performance, while reverse stock splits are often interpreted as signs of potential financial or operational problems. This study contributes to the literature on financial markets in emerging economies and provides practical implications for managers, investors, and regulators. A better understanding of market reactions to share restructuring can support more informed decision-making, especially in dynamic capital markets such as Indonesia.

 © 2026 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

Stock split, Stock return, Cumulative abnormal return, Event study, Indonesia stock exchange

 Article history

Received 17 September 2025, Received in revised form 25 January 2026, Accepted 21 February 2026

 Acknowledgment

No Acknowledgment. 

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

Suidarma IM, Putri NWOP, Dewi PAS, Putra IKKA, Sara IM, and Marsudiana IDN (2026). The impact of stock splits and reverse stock splits on stock returns in the Indonesian market. International Journal of Advanced and Applied Sciences, 13(2): 229-239

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 Figures

  Fig. 1 Fig. 2 Fig. 3 Fig. 4

 Tables

  Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 

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