The signalling of management about their companies' performance through bonus issues

The present thesis aims at investigating the validity of information signaling hypothesis through bonus issues in Turkey. The study looks at all the bonus issues by industrial companies realized during 1995-1997 period. It uses event study methodology to search for the positive average abnormal returns and the correlation of those with the real changes in yearly Net Sales ("NS"), Earnings Per Share ("EPS") and Earnings Per Price ("EPP") figures of the selected companies within 30 days before and after the bonus issue. The results support the positive abnormal return and abnormal volume increase before the split execution date, however no significant correlation between average abnormal returns and the selected indicators could be detected. This finding is contrary to the information-signaling hypothesis through bonus issues.