I too am indifferent to this superficial action by Reece!
I was however interested to read research on the topic of share splits and subsequent business and share price performance. Rice University's David Ikenberry appears to be the academic renowned to have looked into the subject.
A 1996 study by David Ikenberry of Rice University measured the short and long-term performance of stock splits. His research included all the 1,275 companies whose stock split 2-for-1 between 1975 and 1990. Mr. Ikenberry compared the split stocks to a control group of stocks for similar-sized companies in similar sectors that had not split. His results were startling. The split stock group performed 8% better than the control group after one year, and 16% better after three years.
In August 2003 Mr.Ikenberry - now Chairman of the Finance Department at the University of Illinois at Urbana-Champaign - updated the stock split study. This time he looked at companies from 1990 to 1997. Using a similar methodology that included 2-for-1, 3-for-1 and 4-for-1 stock splits, he found the results were essentially the same. Shares of split stocks on average outperformed the market by 8% the following year and 12% over the next three years.
More Split Research
Another study published in 2005 by Oliver Rui, Steven Wang and Tak Yan Leung at the Chinese and City Universities of Hong Kong and Hong Kong Polytechnic University backs up Ikenberry's conclusions. In an abstract summarizing their study the professors stated that ...
"Although stock splits seem to be purely cosmetic, there is ample empirical evidence that they are associated with abnormal returns. This study analyzes the effect of stock splits using intraday data and insider trading data in Hong Kong from 1980 to 2000. Consistent with the findings of other countries, we observe positive price reactions in Hong Kong."
The above research points to two possible hypotheses:
1. Share splits realign prices to a "preferred trading range".
2. The split is a signal of private information by management, taken as a credible signal by the market.
Also of interest is other research on whether splits lead to improved liquidity and marketability. Baker & Gallagher (1980) and Szewczyk & Tetsekos (1995) found that moving share prices to lower levels led to higher institutions ownership and not individual investors! I wonder if this is Reece's motive?
This is probably research involving psychology more than fundamental investing - which I'm more attuned to. But moderately interesting nonetheless.
The Ikenberry research report can be found here
http://www.valuewalk.com/wp-content/uploads/2014/12/whatdostocksplitsreallysignal.pdf
(20min delay)
