The primary purpose of this study is to test the validity of the trading range hypothesis as a basis for stock split decisions of Turkish companies. In the first part, the liquidity effects of stock splits on Turkish stocks are examined. Second, the optimal trading ranges for different-sized firms and firms with different investor bases are determined. Finally, the main empirical question of the study is analyzed by testing whether or not Turkish firms whose share prices rise above their optimal trading ranges are more likely to split their stock compared to firms whose share prices are at or below their optimal trading ranges. The empirical findings about the level of liquidity indicate that there is a slight decline in liquidity in the post-split periods. Analysis of the relationship between firm characteristics and share prices shows that firm size has a positive effect on share prices. The effect of investor base on share prices could not be identified. Finally, the estimation of the logit model utilized in the study to determine the probability of firms to split does not reveal any statistically significant result.

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