Immortal Characteristics in the Iliad and the Aeneid Essay Example for Free

Immortal Characteristics in the Iliad and the Aeneid Essay Although written in two distinct eras, The Aeneid and The Iliad offer views of the Trojan War, which have been studied for centuries.   The Iliad, written by Homer in 750-650 BCE, portrays the tale from the Greek point of view.   Sometimes thought to have been a mythic person himself, the telling of The Iliad is attributed to him nonetheless.   The story, written originally in ancient Greek, speaks from an omniscient narrator who can share all details encountered in the main character, Achilles, involvement in the war. Achilles has refused to fight in retribution for Agamemnon stealing his war prize, Briseis.   The Aeneid, on the other hand, is known to have come from the Roman poet, Virgil.   Although the main character, Aeneas, tells portions of the story, Virgil himself narrates the majority of the tale.   Aeneas is traveling to Italy to build a race of Romans.   Juno, who is still angry with the Trojans, sets Aeneas off course and the story begins with a recounting of the war itself. In the way the tales themselves offer varying illuminations on the same setting in Greece, the Gods portrayed share differing characteristics.   In The Iliad, Zeus stands as the king of the Gods.   He refuses to take sides in this war of men, although his favor moves to the Trojan side after Achilles’ mother begs him to intervene.   We find Zeus bothered by the request.   He is involved with domestic disputes already with his wife, Hera, and is reluctant to do any further damage to his solitude.   â€Å"Here is trouble.   You drive me into open war with Hera sooner or later: she will be at me, scolding all day long. Even as matters stand she never rests from badgering me before the gods: I take the Trojan side in battle, so she says,† (Homer, I.593-599).   He does go on to promise he will do as she has asked, although the reader can sense his foreboding in doing so.   His foresight is strong though, as Hera’s reaction is as he said it would be – biting and harsh.   Ã¢â‚¬Å"Who is it this time, schemer?   Who has your ear?   How fond are you of secret plans, of taking decisions privately,† (Homer, I.620-622).   Zeus is portrayed as a beaten God, one who is verbally assaulted by his own wife and appears to be weary of her scorn. One can sense the laughter as the words are written, the hidden personalities that are so similar to common man. Jupiter, however, does not worry over what he will go through personally in order to grant the wish of the goddess who has appealed to him.   Ã¢â‚¬Å"With the serenity that calms the weather, and lightly kissed his daughter.   Then he said: No need to be afraid, Cytherea.   Your children’s destiny has not been changed,† (Virgil, I.345-348).   Jupiter has granted what she sought, and promises that her progeny will found the great kingdom of Rome, named after one of the twin sons to come from Aeneas.    The reader can already discern favoritism for the Romans by this issuance of Jupiter.   He is not a hen-pecked God as Zeus is, although Jupiter’s wife is not a timid creature.   Much like Hera, she is vastly upset and carried a grave distaste for the Trojans.   Jupiter, however, feels Juno will eventually relax.   â€Å"Juno, indeed, whose bitterness now fills with fear and torment sea and earth and sky, will mend her ways, and favor them as I do, Lords of the World, the toga-bearing Romans,† (Virgil, I.376-379). The reader gets the sense that the Greek Gods as told of by Homer are seen as folly.   Zeus is not the almighty master, as one would suspect the king of the Gods to be.   He is stuck between caring for his subjects, the minor Gods, and listening to the gripes and complaints of his wife, the telling is almost comical.   Virgil, however, tells the origination of a great race of people, his own Romans.   The Jupiter is patient and assured of the greatness to come.   His caring ways with his daughter and sincere belief that all will be as he said indicate his power and greatness, showing him to be a true King of the Gods. The physical separation between God and mortal man is great.   In the eleventh book of The Iliad, we find Zeus directly interfering with the battle on hand.   â€Å"Now Zeus, the son of Kronos roused an uproar along his host, and sprinkled bloody dew from highest heaven, being resolved that day to crowd great warriors in to the undergloom,† (Homer, XI,58-61).   The battle between Greek and Trojan forces allowed yet another display of Zeus’ great power over man. Zeus demonstrates this power while protecting Hector. â€Å"Hector moved forward with his round-faced shield.   As from night clouds a baleful summer star will blaze into the clear, then fade in cloud, so Hector shone in front or became hidden when he harangued the rear ranks – his whole form in bronze aflash like lightening of father Zeus,† (Homer, XI.67-72).   The soldiers recognize the ability of Hector to shadow himself as the protection of the Gods.   Zeus’ otherworldly display of power and support for the Trojan cause signifies the justness of their cause, yet as we already know, his might is not good enough.   Troy will lose the battle and the God is not all-powerful in the end. The Aeneid however, shows the true power and wisdom of Jupiter is not only just, but up to the task as well.   Aeneas will reach his destination, and Rome will become the great power it is meant to be.   Jupiter sees that Aeneas has fallen sedentary with his love for Dido and remains with her rather than fulfilling his duty as Jupiter told him.  Ã‚   The scourge of the earth is not brought down on his head to force him off the island.   The all-powerful Jupiter simply sends a messenger, Mercury.   â€Å"From bright Mount Olympus he that rules the Gods and turns the earth and heaven by his power – he and no other sent me to you, told me to bring this message on the running winds: what have you in mind?   †¦the land of Rome are due,† (Virgil, IV.365-375). Aeneas is reminded of his family fortune and honor, which are on the line.   True to his word and loyal to his God, Aeneas leaves Dido to fend for herself.   Her misery and subsequent suicide are not given any thought by Jupiter, the mission is at hand and the great Roman peoples are far more important than a single female.   â€Å"Beating her lovely breast three times, four times, and tearing her golden hair, ‘Oh Jupiter! will this man go, will he have mocked my kingdom, stranger than he is and was,’† (Virgil, IV.816-820)?   Jupiter pays her no mind; the Roman Empire is at stake.   Again, it is in silent action, verbal mandates that Jupiter issues his power.   He is not forced to resort to mortal measures to ensure his will is done. Zeus is portrayed as the mover, the God who has to physically partake in things to get anything accomplished.   The stronger God of the two, Jupiter, simply asks and gets what he wants.   The fear of retribution is fierce amongst not only the people, but also the Gods.   He does not take pity on the fallen as Zeus does.   In terms of masculine strength, Jupiter is by far the strongest.   Of course, such an amazing group of warriors, philosophers and artisans could never have come from so slovenly a King as Zeus. As the war wages on in The Iliad, Zeus is once again shown to be a weaker form than the mighty Jupiter.   Achilles has lost his best friend, Patroclus, in battle. Heartbroken, he vows to return to the battle immediately to slay Hector in revenge.   Although Zeus has long since gone to help the Achaeans in fighting this war, â€Å"Zeus took pity on them, saying quickly to Athena: Daughter, you seem to have left your fighting man alone.   Should one suppose you care no more for Achilles?   The he sits, before the curving prows, and grieves for his dear friend. The other soldiers flock to meat; he thirsts and hungers.   Come, infuse him sweet nectar and ambrosia, that an empty belly may not weaken him,† (Homer, XIX.374-382). Athena then goes off to give the poor warriors some nourishment so they may fight bravely in their final battles.   His heart still belongs to the losing side.   We see his weakness again with the interference into the battle.   In calling the Gods to Mount Olympus, Zeus tells them, â€Å"You know what plan I have in mind and why I called you, why you are here. Men on both sides may perish, still they are near my heart.   And yet, by heaven, here I stay at ease upon a ridge.   I’ll have an ample view here.   But you others, go into action, side with the men of Troy or with Achaeans, as each has a mind to,† (Homer XX.22-29).   Zeus lazily tells the other Gods that the people are dying and it breaks his heart.   However, he will sit on the mountaintop and watch the spectacle.   They should go down and help whichever side they feel is just, but he will just watch.   Homer again makes fun of the God.   He is a couch potato during the war he was powerless to stop in the first place.   His wife is constantly meddling in the affairs of state, and Zeus will not step in to act according to his heart. Jupiter does not have this problem toward the end of The Aeneid.   When fighting has broken out in Italy and the great Romans are fighting amongst themselves, Jupiter is asked his opinion.   He responds in a regal and self-assured manner.   When he opens his mouth to speak, all of the earth responds in kind. â€Å"The almighty father then, chief power of the world, began to speak, and as he spoke the great halls of the Gods fell silent, and earth quaked, and silence reigned in the highest air, the west-winds went to rest, the deep sea stilled his waters to calm,† (Virgil, X.137-142).   He has decided that fate will serve each man his own plate.   Jupiter no longer condones divine intervention.   This surprises virtually everyone present, as they have interfered in these matters right from the start.   Yet, the King of the Gods has spoken and it cannot be any other way.   â€Å"He took oath nodding, making all Olympus tremble at his nod.   There was an end of speaking.   Jupiter form his golden throne arose, and lords of heaven on either hand escorted him to the threshold of his hall,† (Virgil, X.160-164). Although the King of the Gods in each depiction of the Trojan wars and its eventual outcomes acted in extremely different ways, the act remains that they were in control the entire time.   The main protagonists for each tale are not afforded this same luxury.   In The Iliad, Achilles never has control over his bloodlust for Agamemnon.   His search for glory and the switching of sides is beyond his control so to speak.   The usurping of his prize from the war damaged his pride and it is the sole driving force for him.   When his best friend is killed, he appears to have devised a higher purpose for his rage, yet the reader notes he is still guided for his own gratification throughout. Aeneas, blindly does as he is bid to do.   He leaves his heart behind when he leaves Dido on the island.   Jupiter is not concerned with the trivial matters before him, and concerns himself only with the Roman creation.   Aeneas cannot simply believe that Dido will eventually understand what he must do, unlike Jupiter feelings for Juno.   The foresight the Gods portray separate them greatly from humanity, making the people seem as though they are simply pieces of a chess game, there for the amusement of creatures bored with eternity. Although Homer pokes fun at the God from the past and uses the tale to tell of the heroism of the Greek people, he fails to place his own God at the forefront as a just and caring ruler.   Virgil at least shows the God of the Romans as one who delights in the magnificence of the race. Physically the gods are far superior to the men they control, but in the case of Zeus, he is far from being above the simple human frailty of emotion.   Homer instills a sense of commonality between the people and their God, one in which the playing field is an equal one.   The Gods are affected by this war almost as much as the people are.   When interfering in the matters of men, the Gods are shaken to the core in some instances, harmed in others, and heartbroken other times still. For Virgil, the people end on the positive note.   The great anti-hero is dead, and the true hero does not turn out to be Aeneas, but the Romans themselves.   The reader sees throughout the epic poem, that Virgil had them in mind all along.   The creation myth of the great empire seeks to solidify their place in the world and by showing that that creation came from a just and powerful authority he accomplishes just that. Works Cited Homer.   The Iliad. Trs. Robert Fagles.   New York, NY: Penguin Classics, 1998. Virgil. The Aeneid. Trs. W.F. Jackson Knight. New York, NY: Penguin Classics, 2006.

Romesh Gunesekeras Ranvali: A Refutation of Conventional Characterizat

Romesh Gunesekera's Ranvali: A Refutation of Conventional Characterization "Ranvali" serves as a personal reminder. It conveys sadness and regret with the narrator's realization only years after her father had died that she had been mistaken about certain aspects of him and that after this realization, she was unable to try to improve their relationship because he was no longer alive. The characterization of her father is essential in carrying across this sadness and regret because his character - the person of the father, to be contrasted with the qualities of the father, is the preconditions for the narrator's flashbacks. The objective of this paper is to refute the conventional argument that the functional role of a character makes it secondary in importance in a narrative and hence, show "Ranvali" to be a character-centred narrative. The stand that this paper takes, therefore, is that the functional role of the narrator's father makes his character an integral part of the narrative, such that "Ranvali" is a character-centred narrative. Before embarking on the analysis of "Ranvali", it is necessary to introduce three theories surrounding the notion of character in narratives. According to Aristotle's theory of character, a distinction can be made between an agent - a person who performs actions and is necessary, and, a character - "something that is added later and in fact, not even essential to successful tragedy . . . Added later . . . if at all" (qtd. in Chatman 109). In "Ranvali", the narrator's father is an agent because of his importance to the story, which will be elaborated upon later. However, he will be constantly referred to as a character in this analysis so as to be consistent with the terminology throughou... ...ves. By superimposing Todorov's theory of character, the second inference - this secondary importance of characters in narratives implies that such narratives are not character-centred, was made. The first argument has already been refuted in the previous section where the functional role of the father is shown to cause him to be of primary importance in "Ranvali". As for the second argument, it has been refuted along with the refutation of the first argument, as well as, the satisfaction of both of Todorov's criteria. The conclusion, therefore, is that "Ranvali" is a character-centred narrative, where the deceased father is a primary character. Works Cited Chatman, Seymour, "Existents" Story and Discourse: Narrative Structure in Fiction and Film. Ithaca: Cornell UP, 1978. 108-114. Gunesekera, Romesh. "Ranvali." Monkfish Moon. London: Granta, 1992:89-102.

AGs Seek Sex Offender Data from MySpace

The article â€Å"AGs Seek Sex Offender Data from MySpace†Ã‚   by Associated Press writer Samuel Spies, discussed recent events where law enforcement officials have taken measures to obtain names of registered sex offenders who are members of   the website MySpace.com.According to the article, attorney generals from eight states which include: Ohio, Mississippi,   North Carolina, Pennsylvania, Idaho, New Hampshire, Connecticut, and Georgia have requested that MySpace, which is used for social networking give them information on the number of registered sex offenders using MySpace and where those offenders reside.The attorney generals have also asked MySpace to inform them on the measures they have taken to remove sex offenders from their site and what they have done to caution MySpace members about sex offenders.   Some of the attorney generals feel that Myspace is the biggest networking site, thus MySpace should identify offenders who use their networking site to prey o n children.The article also discussed how MySpace has partnered with Sentinel Tech Holding Corp. to create a database of sex offenders, which has found that a large number of sex offenders are Myspace members.   MySpace has also begun using software that identifies and removes sex offenders from their site.MySpace officials also stated that; MySpace will send any identified sex offender’s information to the National Center for Missing and Exploited Children, who would then forward the information to law enforcement.   There have been numerous MySpace related crimes committed against children; therefore the attorney general of North Carolina wants to pass legislation, which makes it a felony for sex offenders to register on social networking sites.At the moment it is unknown whether MySpace is going to cooperate with the requests of the attorney generals.  ReferenceSpies, S. (May 14, 2007). AGs Seek Sex Offender Data from MySpace. Retrieved May 21,2007, from http://abcne ws.go.com/US/WireStory?id=3174533&page=1.

Study On The Market Response To Stock Splits Finance Essay - Free Essay Example

Sample details Pages: 12 Words: 3732 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Essay any type Did you like this example? The market response to stock splits is investigated with the dataset from an emerging country à ¢Ã¢â€š ¬Ã¢â‚¬Å" India for period 2006 March 2009. study reports significantly positive abnormal returns on day of split execution and next trading day. regression analysis suggests that the reaction can be attributed to liquidity hypothesis. The postsplit period experiences abnormally high negative which wipes out any positive gain during split execution. This seems mostly explained by presplit price increase and size of firms suggesting that the have experienced a in period are ones suffer worst returns. In theory, stocksplits are cosmetic corporate events as they simply increase the number of outstanding shares and decrease the price of each outstanding share. Hence, there should be no significant effect on the value of the firm. A stock split does not change the revenue or assets of a company. So, stocksplit should cause no change in price other than the adjustment warra nted by the split factor. There should also be no change in distribution of stock returns around exdates of stock splits. Exdate refers to the date on or after which a security is traded without a previously declared dividend or distribution. However, empirical evidence suggests that the market generally reacts favorably to stock splits. In different developed markets, for instance, UK and US, significant positive abnormal returns and increase in variance and volumes of trade have been documented around stock split announcements as well as exdates. The contradiction between theory, which expects no change in firm value consequent to stock splits, and the reality, with scores of evidence of significant market reaction, triggers the present study. In February 1981, the Indian ministry of finance issued a guideline that denomination of equity shares be fixed uniformly at Rs.10, and that the denomination of the then existing shares other than Rs.10 be converted into denomination of R s.10. In another guideline in January 1983, the Indian government clarified that denomination of shares of Rs.100 need not be changed to denomination of Rs.10, i.e. shares of all companies were required to be in denominations of Rs.10 or Rs.100 only. Even so, several companies converted the denomination of shares of Rs.100 into that of Rs.10 on the grounds that it generated better liquidity, as also a higher value for the shares. However, in March 1999, the Securities and Exchange Board of India (SEBI) decided, with the objective of broadening the investors base, to dispense away with the requirement of standard denomination of Rs.100 or Rs.10 and gave freedom to companies to issue shares of any denomination but not below Re.1. Companies that had issued shares of the face value of Rs.10 or Rs.100 were also permitted to avail of this facility by consolidation or by splitting their existing shares. To reap benefits of splitting, a number of existing listed companies having denomina tion of Rs.100 or Rs.10 have split their stocks into different denominations, e.g., Re.1, Rs.2 or Rs.5, etc. These recent changes in the Indias regulatory environment offer a unique opportunity to gain further insight into the stock splits with reference to their effects on variables like stock prices, return, volatility, and trading volume. With the increased integration of international markets in general and a wave of liberalization and globalization, the importance of understanding these stock events has increased dramatically. Further, there are different capital gains tax laws in India. Under these circumstances, splits may have different effects contrary to what has been reported in various literatures. Furthermore, compared to the worlds major stock exchanges, there are proportionally more small firms listed on Indian exchanges; consequently, many firms are thinly traded. Hence, these differences between Global and Indian markets necessitate studying split events in India. The results of the present study shows significantly positive cumulative abnormal returns on and the next trading day after split execution, following which there is a major decline in share prices which wipes out most of the gain of the execution period. The signaling hypothesis and the trading range hypothesis do not seem to provide any explanation for the significant CAR around execution date, while the liquidity hypothesis seems to contribute significantly towards the positive CAR occurring on and immediately after the execution. The small firm hypothesis also 6 shows weak explanatory power for the change in wealth. The post execution negative reaction is mostly explained by run up of stock prices preceding the execution, implying that the stock split has induced a revision of stocks fundamentals, probably bringing prices to a more fundamental level. 7 2. . Literature review There have been numerous researches on the effect of stock splits on different pa rameters of capital markets. Fama etal (1969) has been the pioneering study to examine the share price performance of splitting firms. Although the economic literature has not yet found a definitive explanation for either the abnormal returns observed around the announcement and execution dates, or the reasons why managers decide to split, different explanations, not necessarily mutually exclusive have been proposed. The more prominent hypotheses are the signaling hypothesis, the trading range hypothesis, the liquidity hypothesis and the neglected firm hypothesis. One such research paper advocates considering the three different market efficiencies (weak form, semistrong form, and strong form) that the investor can make an above normal return by relying on public information impounded in a stock split announcement. This study agrees that according to the semistrong form market efficiency, the stock split announcement do impact the company stock price. The study done by Desai, Jain ( 1997) elaborates more on longrun performance of common stock following stock splits announcement and hence concludes that the capital market doesnt fully react to the information conveyed in the stock split announcement. Considering the ignored studies of small firms, the paper examined firm portfolio of different sizes and more diversity in terms of industries. Taking a large sample of stock information for a period of 1976 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 91, the research paper concluded that the market does not incorporate the full effect of the stock split announcement in the month of announcement. It is evident that managers believe that stock split results in optimal trading price of a stock that attract small investors and hence enhances liquidity. Joshipura (2008) studied the price and liquidity effects associated with stock split surrounding its announcement and execution 8 dates in Indian stock exchanges. The results suggested that though there were some positive abnormal return associated surrounding announcement and execution dates of the stock split, but it reverses in just a few days after the event dates, and ultimately generates significant negative abnormal return in slightly longer postexecution window. It also found that there was a significant improvement seen in liquidity surrounding announcement and execution dates of stock split. Desai and Nimalendran (1998) examined the effect of the change in trading activity after stock splits on volatility and spread. The results of the study show that the increase in volatility cannot be attributed solely to microstructure biases arising from the bidask bounce and price discreteness. Even after correcting for these two biases, the study found a significant increase in volatility after the split. The study also found an increase in the number of trades after the split, and the increase in the biasadjusted volatility was positively related to this increase in the number of trades. The study decomposed volat ility into transient and permanent components and found that both components of volatility increase after the split. Attributing transient volatility to noise traders and permanent volatility to informed traders, the study suggested that trading by both types of traders increases after the split. Ikenberry, etal (1996) discusses that splits are used to move stock prices into a trading range to increase liquidity and that they are used by management as a signal of positive private information. The study found evidence that is consistent with the view that splits are typically used to realign stock prices to a normal trading range. The study also confirmed that splits convey favorable information, thereby validating the signaling hypothesis. It was found that market reaction was greater for small firms, low booktomarket firms and firms splitting to low share prices. The study also found an inverse relationship between the presplit run up and postsplit excess returns, suggesting that t he results were not attributable to momentum. 9 There are various studies devoted to studying the effect of stock splits in specific geographies. Asquith, etal (1989) examined stock splits in the US market and found that stock splits do convey earnings information. The results indicated that firms split their shares after a significant increase in earnings. Before the stock split announcement, the market expects these earnings increases to be temporary. The split announcement leads investors to increase their expectations that the past earnings increases are permanent. The study also found that the markets reaction to the split announcement cannot be attributed to expectations of either future earnings increases or nearterm cash dividend increases. Elfakhani, etal (2003) examined the market behavior surrounding stock split announcements in the Canadian market for the 1977à ¢Ã¢â€š ¬Ã¢â‚¬Å"1993 period and the effect of the 2year before compared to the 2year after the announce ment. Using the event study methodology, the findings indicated that positive abnormal returns exist on both the announcement days (0,1) and the 11day period surrounding stock split announcements. The results also showed that following the split event, bidask spreads decrease, while both trading volume and the number of transactions increase thus suggesting that split events enhance liquidity. Further, the study observed that earnings grow in the 2year period following split events, thus implying that split events signal future performance of the firm. Wulff (2002) investigated market reaction to stock splits using a set of German firms and in line with the US findings, found significant positive abnormal returns around both the announcement and the execution day of German stock splits. The study also observed an increase in return variance and in liquidity after the exday. The study found that abnormal returns around the announcement day are not related to changes in liquidity, but (negatively) to firm size, thus lending support to the neglected firm hypothesis. Despite noting a substantial increase in liquidity after the split, the study did not find support for the liquidity 10 hypothesis. Menendez, etal (2003) analyzed the motivations and valuation effects of stock splits in the Spanish market. The findings of the study suggest that splitting firms present a presplit stock price above the normal trading range, and that, after the split, the number of transactions and the average transaction size increase significantly. Moreover, positive abnormal returns are observed around the announcement dates and around the exdate. For the latter, however, these positive wealth effects are outweighed by the negative abnormal returns observed closely afterwards. The study found that liquidity, or the optimal trading range hypotheses prevailed over other hypotheses as an explanation for stock splits in the Spanish market. The findings of the study suggest the mai n reason behind a stock split and for the positive market reaction around the stock split announcements is a higher share price than the normal trading range. The reduction of this higher price seems to attract small investors and thus significant increases in the number of transactions and reductions in the trading volume per transaction after the split are observed, without there being any significant variation in the volume of shares traded. This adjustment of the firms stock price to a normal trading range is valued positively by investors. Most of these studies are concentrated mainly around market reaction at the announcement date. In a study on the UK equity market, specifically concentrating on the exsplit date, Staikouras etal, (2009) has documented positive abnormal returns on and around the exsplit date which are partially predictable using the publicly available information prior to the exsplit date. The study also observed a persistent increase in the post split volatil ity of the stocks in the UK equity market with this increase being better explained by the daily trading volume. This is in contrast to the US findings where the daily number of trades was found to better capture the increase in volatility. 11 In this study, the market response to stock splits is investigated with the dataset from an emerging country à ¢Ã¢â€š ¬Ã¢â‚¬Å" India, which is distanced from the west in terms of geographical location, economic development, institutional and legal framework. Not much is available in the Indian context with a focus on the exsplit date, so far, except for the commendable work by Mishra (2007), which documents negative effect on price and return of stocks following splits. The study also reports a positive effect on volatility and trading volume following the split events. The present paper tries to provide a few additional insights on the issue and therefore, differs from Mishras (2007) study in the following ways. Firstly, an attempt i s made to explain the significant cumulative abnormal returns around the split execution dates with the help of regression analysis. Secondly, the independent variables cover issues like small firm hypothesis, price run up, deviation of price from market average, which are unexplored in his paper. Thirdly, the data set of the present study covers the period post Mishras study, i.e., from 2006 to March 2009. HHHHyyyyppppooootttthhhheeeesssseeees s ffffoooorrrrmmmmuuuullllaaaattttiiiioooon n TTTThhhhe e ssssiiiiggggnnnnaaaalllliiiinnnng g hhhhyyyyppppooootttthhhheeeessssiiiis s The signaling hypothesis proposes that, in a scenario of asymmetric information between managers and investors, managers may use stock splits to signal positive information to the market about the firms future expectations. The presence of positive abnormal returns around the stock split announcement that is found in many empirical studies provides evidence for the signaling hypothesis. 12 Trading range hypothesis According to the optimal trading range hypothesis, stock splits are used as tools to realign the share price to a desired price range so that it is more affordable for small investors to buy round lots of shares. If the presplit share price is at a high level, then a stock split is justified for improving the marketability of the shares. Empirical findings suggesting an increase in the daily number of transactions after the split do not reject this optimal range hypothesis. TTTThhhhe e lllliiiiqqqquuuuiiiiddddiiiitttty y hhhhyyyyppppooootttthhhheeeessssiiiis s The managements motivation to bring the share price to an optimal trading range arises from the desire to improve liquidity. According to literature there is an observed increase in trading volume during the postsplit period, and hence provide support for the liquidity hypothesis of stock splits. Staikouras etal, (2009) in their study of the UK equity market document a strong and positive relationship b etween the measures of trading activity and the returns volatility over the preand postsplit horizons. SSSSmmmmaaaalllll l ffffiiiirrrrm m hhhhyyyyppppooootttthhhheeeessssiiiis s Small firm or neglected firm hypothesis suggests that since the smaller firms have fewer announcements published in the financial press, the split announcement is expected to create greater market interest than it would be in case of larger firms. So, small firms may have an incentive to adopt the stock splits to grab more attention. Based on the discussion above, we can lay down the objectives of this study. The study proposes to, using data from the Indian stock market, examine the presence of positive abnormal returns over the stock split 13 period and, if found to be true, to study whether the returns can be explained using any of the hypotheses mentioned above. We formulate the following hypotheses: HHHH1111: There is no significant abnormal return around the exsplit date. HHH H2222: If H1 rejected, returns are identical for all firms in sample. HHHH3333: and H2 the abnormal observed around event window [1,+1] can be attributed to publicly available information based on one or more of theoretical hypotheses above. HHHH4444: If H3 is true, a similar explanation can be made using this data for different time horizons around the exdate. An event study framework is employed to test the above hypotheses. An OLS regression model is used for determining the factors for the occurrence of abnormal returns across the event window. 14 3333. . DDDDaaaatttta a aaaannnnd d MMMMeeeetttthhhhooooddddoooollllooooggggy y 3333.1 DDDDaaaatttta a CCCCoooolllllllleeeeccccttttiiiioooon n The basic sample is comprised of all Bombay Stock Exchange (BSE) equity stocks that have split between January 2006 and March 2009. The National Stock Exchange website was used to download list of stocks that have undergone a stock split in this period. There were a total of 151 stock splits during the period. All financial data series for these stocks like daily closing adjusted prices, market capitalization, trading volume and market indices were downloaded from Thomson DataStream. The following criteria have been applied to include a company in the sample. i) The stock price data is available for 260 days prior to the exsplit date. ii) Data for 260 days are available for the postsplit period. iii) Where a stock has split more than once in the sample period, the first exsplit date was considered. iv) Other required financial information is available. After filtering on the basis of the above criteria, the number of firms on which the analysis could be carried out was 99. 3333.2 DDDDaaaatttta a AAAAnnnnaaaallllyyyyssssiiiis s Table 1A Table 1B below show summary statistics of the sample stocks used for this study. There is an even distribution of stock splits in each year of the sample period indicating normal stock split activity in the Indian equity market 15 for the given period. However, analysis on a monthly basis reveals that August, September and October are the most active months for stock splits, possibly indicating a preference by firms to execute the split around that time. More than 40 percent of the firms in the sample have the stock split in this period. 5:1 split is the most common split ratio (57 firms) in the sample followed by 10:1 and 2:1 split ratios. For the 4:1, 6:1 and 5:2 split ratios, there is only one stock in the sample period. Therefore, summary statistics for these stocks were not calculated as any observations made would be a result of a very firm specific performance and not a general conclusion. The average price for the 2:1, 5:1 and 10:1 split sizes are Rs. 229.99, Rs. 192.30 and Rs. 215.27 respectively. No conclusive relation between the stock price and the split ratio can be inferred from the maximum and minimum values shown below. The average marketcap for the 2:1, 5:1 and 10:1 split sizes are Rs. 13068.56 million, Rs. 57129.56 million and Rs. 87126 million respectively. The average market capitalization is observed to increase with higher split ratio possibly indicating that the largecap stocks are the ones that usually opt for the higher split ratio. 16 TTTTaaaabbbblllle e 1111AAAA: : SSSSttttoooocccck k SSSSpppplllliiiit t ssssaaaammmmpppplllle e ddddiiiissssttttrrrriiiibbbbuuuuttttiiiioooon n TTTTaaaabbbblllle e 1111BBBB: : SSSSttttoooocccck k SSSSpppplllliiiit t ssssuuuummmmmmmmaaaarrrry y ssssttttaaaattttiiiissssttttiiiiccccs s 17 3333.3 MMMMeeeetttthhhhooooddddoooollllooooggggy y EEEEvvvveeeennnnt t bbbbaaaasssseeeed d ssssttttuuuuddddy y Event studies start with hypothesis about how a particular event affects the value of a firm. The hypothesis that the value of the company has changed will be translated in the stock showing an abnormal return. Coupled with the notion that the information is readily impo unded into prices, the concept of abnormal returns (or performance) is the central key of event study methods. How does a particular event affect the value of a company? We must be careful because at any time we observe a mixture of market wide factors and a bunch of other firm events. To correctly measure the impact of a particular event we need to control for those unrelated factors. The selection of the benchmark to use or the model to measure normal returns is therefore central to conduct an event study. The empirical model can be stated as follows: when an event occurs, market participants revise their beliefs causing a shift in the firms return generating process. For a given security, in non event periods, Rt = xt B + et while in event periods, Rt = xtB + FG + et Rt is the return of the security in period t, xt is a vector of independent variables (for example the return of the market portfolio) in period t, B is a vector of parameters, such as the security beta, F i s a row vector of firm characteristics influencing the impact of the event on the return process. G is a vector of parameters measuring the influence of F on the impact of 18 the event and et is a mean zero disturbance term possibly differing in event and non event periods. Hypotheses usually centre on the parameters that measure the influence of the event (G) and most of the times F is set to unity. The null hypothesis is that such an event has no impact on the return generating process. Event study methods are the econometric techniques used to estimate and draw inferences about the impact of an event in a particular period or over several periods. The most common approach involves three steps: (1) Compute the parameters in the estimation period; (2) Compute the forecast errors (and obtain variance/covariance information) for a period or over an event window; aggregate across firms and infer about the average effect; (3) Regress crosssectional abnormal returns on releva nt features of the stock supposed to influence the impact of the event. In this study, the event is the split execution date, defined as day 0. The event splits the sample into two sets à ¢Ã¢â€š ¬Ã¢â‚¬Å" the presplit period and the postsplit period. The presplit period considered in this study is a period of 260 days prior to the event date (260 days to 1 day) and the postsplit period is the period of 260 days after the event date (+1 day to +260 days). This leads to a total period of 521 trading days data for each stock (including the split date) centered around the event date for that stock. In essence, all stocks are aligned according to their event timeline. The estimation window is the 220 day period from 260 to 41 trading days. A similar event based alignment of data was performed for the other financial data namely market capitalization, market index and trading volume. In this study, the benchmark index chosen for running the regression for the market model is the BSE 10 0 index. The index price was also aligned according to the split date for each stock to obtain comparable market 19 return at and around the event date. The Brown and Warner (1985) methodology is applied to test for the significance of abnormal returns. Regressions to estimate the parameters of the market model The standard single index asset pricing model is used to estimate the market parameters ( ÃŽÂ ² and c). The market model used to estimate the parameters is given as below: Ri = ÃŽÂ ²Rm + c where Ri à ¢Ã¢â€š ¬Ã¢â‚¬Å" expected return of stock i Rm à ¢Ã¢â€š ¬Ã¢â‚¬Å" market return c constant of regression Don’t waste time! Our writers will create an original "Study On The Market Response To Stock Splits Finance Essay" essay for you Create order