Who Gets the Bonus in Bonus Stock Issuance?

Abstract

“This study examines bonus stock issues by Malaysian companies over the six year period 1990- 1995. We find abnormal price behaviour around announcement date. Most of this was in the form of abuild up in prices before announcement date. The most significant price increases were in the 15 day period just before announcement with a peak on the day following announcement, We find no change in daily price volatility, trading volume nor any wealth effect as a result of the bonus, Differences in bonus ratios did not matter. Though bonus issuing stocks collectively had above normal returns pre and post bonus, it is argued that thi is regardless of the bonus decision. Neither the shareholder nor issuing company appears to benefit,