Split

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Split

Sometimes companies split their outstanding shares into more shares. If a company with 1 million shares executes a two-for-one split, the company would have 2 million shares. An investor with 100 shares before the split would hold 200 shares after the split. The investor's percentage of equity in the company remains the same, and the share price of the stock owned is one-half the price of the stock on the day prior to the split.

Split

The act of a publicly-traded company increasing the number of outstanding shares, while maintaining the same market capitalization. In other words, a company engages in a stock split in order to decrease its share price by increasing the number of shares available. Current holders of the stock are given more shares so that they maintain the same percentage of ownership in the company. For example, a company with a share price of $400 may double the number of shares so that the share price drops to $200. Companies conduct stock splits for a number of reasons; one possible reason is to keep its shares affordable. See also: Last Split, Split Ratio, Split Adjusted.

split

A proportionate increase in the number of shares of outstanding stock without a corresponding increase in assets or in funds available, as would be the case in a new stock offering or in an acquisition that uses stock as payment. Essentially, a firm splits its stock to reduce the market price and make the shares attractive to a larger pool of investors, although it is questionable if the firm's stockholders actually benefit from a split because share prices are reduced proportionately with the increase in shares outstanding. A 4-for-1 split would result in an owner of 100 shares receiving 300 additional shares, or an after-split total of 4 shares for every 1 share owned before the split. Also called split up, stock split. Compare reverse stock split.
Case Study In April 1996, directors of the Coca-Cola Company approved a 2-for-1 split, the firm's fourth stock split in a decade. The announcement stated that trading in the split shares would begin on May 13, approximately a month after the split was announced. Shares of the firm's common stock fell by $1.25 with the announcement. Shareholders of Coca-Cola could expect that the stock price would decrease by half when the securities commenced trading on a post-split basis. A stock split results in additional shares of ownership without a corresponding change in total income or assets. All per-share financial statistics decline in proportion to the size of the split. Thus, a 2-for-1 split results in twice the outstanding shares, each with half the book value and half the earnings as prior to the split. In general, stock splits create more paper but not more value for shareholders, because the market value of the stock can be expected to fall in proportion to the size of the split. A stock trading at $60 per share just prior to a 4-for-1 split should trade at approximately $15 per share following the split. Academic research investigating how or when investors can profitably invest in stock split situations offers mixed results. Some research indicates that trading stock just prior to a split may create unusual profit opportunities. One well-known study finds that unusual returns can be earned in the days before and after the announcement, but not on the date of the actual split. Other research indicates investors will earn unusually low returns by investing in stock in the year or two following a split. This variability of results means the individual investors cannot expect to earn unusual profits by purchasing a stock just prior to or following a split. By the time a split occurs, any unusual profit opportunity has already passed.
References in periodicals archive ?
Chicago architect Ellen Bailey Dickson, AIA, enveloped her own split-level in Tudor-style gables of shingles and stone, rendering it unrecognizable--and much more attractive.
The survey administered to the UG's asked questions focusing on their experiences as a mentoree by probing their attitudes about a) the class in general, b) their learning as a result of having mentors in class with them, c) having teachers in the same class with them, d) the mentoring climate that took place in the course thus far, and e) whether or not the student would be inclined to take another split-level course in the future.
He warned that approval of the extrajudicial killings is 'a symptom of split-level spirituality.
The Paddock consists of just 18 three and four-bedroom detached and semi-detached homes with several innovative designs of split-level and two-storey homes offering contemporary living in this traditional rural setting.
The magnificent kitchen includes an Aga, Belfast sink and granite worktop; The sitting room is just off the dining area, making it ideal for entertaining; The period property has plenty of parking, extensive gardens and a split-level pond
On the first floor a split-level landing leads to two double bedrooms and modern bathroom with separate shower and stairs to a third bedroom.
Drivers on the A38 will feel the benefit with a clear run through a new split-level junction.
The Real Madrid ace and the ex-Spice Girl are said to be in talks for a split-level garden flat in Belgravia's Eaton Square.
Now I'm always on the Net posting resumes and [searching] for ideas on how to look for a job," says Kym, And with a wireless split-level house and yard, she can do it from anywhere.
Golden Chopstix presents a cool, lime green decor in its handsome, split-level dining room and has young, caring, smiling management and staff personnel.
The Advocate talked with Langan, who lives in the Long Island split-level he shared with Spicehandler, about the lawsuit and what it means.
Mounted at one end of the revolving arm was a three-foot-square curved architectural model of suburban real estate: a split-level house with a swimming pool (its water held in place by centrifugal force).