Two other studies also examine the relation between earnings and the price response to splits; unfortunately, due to methodological differences their results provide no evidence regarding the issue raised by AHP. For example, McNichols and Dravid [19] find that split announcement-period abnormal returns are positively related to analysts' earnings forecast errors observed for the fiscal year-end that follows the announcement. At first glance, this result appears inconsistent with AHP. However, unless one knows the source of analysts' underestimation of post-split earnings, ., unanticipated earnings increase after the split or analysts not recognizing that pre-split earnings increases are permanent, it is impossible to conclude that their results.
