A stock split has no effect on the retained earnings account.

Question

Quizplus · Accepted Answer

Tests examining the impact of such events as stock splits and stock dividends, corporate announcements, and changes in accounting policy indicate that the market is generally efficient in a semi-strong sense. According to the semi-strong form of the efficient market hypothesis, investors not only digest information very quickly, but they also are able to see through mere changes in accounting information that do not have economic consequences. Research studies indicate this has no positive impact on valuation.

A Stock Split Has No Effect on the Retained Earnings