The effect of stock splits on clientele: Is tick size relevant?

We explore whether the relation between stock splits and clientele is driven by binding tick sizes. We find little evidence that firms adjusted prices to maintain similarly binding tick sizes as the NYSE reduced tick sizes. Furthermore, though splits that increase the extent to which tick sizes are binding are associated with greater increases in spreads, these splits experience similar changes in measures related to clientele, including trade size, breadth of individual and institutional ownership, and analyst following. We find little evidence supporting theories, such as spread-induced sponsorship, that rely on binding tick sizes to link splits and clientele.