Opportunistic stock splits

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 suspicious splits are followed by a 53 percent lower buy-and-hold-abnormal return, a 68 percent higher likelihood of announcing an earnings restatement, and a 48 percent higher likelihood of CEO turnover within the 5-year, post-split period. Our results are robust to the use of propensity-score matching and to controlling for CEO characteristics, incentives, and corporate governance. Our findings concerning these stock splits highlight agency issues that are understudied.