share split

Stock 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 for investors. See also: Last Split, Split Ratio, Split Adjusted.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

share split

or

stock split

an increase in the number of SHARES in a JOINT-STOCK COMPANY matched by an offsetting reduction in the PAR VALUE of each share so that it does not affect the capitalization of the company For example, Company X has 10,000 authorized, issued and fully paid up shares each with a par value of £1; and total SHAREHOLDERS' CAPITAL is shown in the BALANCE SHEET at £10,000. The STOCK MARKET values the company at around £100,000, making each share worth £10. The company wishes to attract a wider shareholder base by reducing the market PRICE of each share, and so undertakes a two-for-one stock split, giving existing shareholders two new 50p shares for each £1 share held. The company now has 20,000 authorized, issued and fully paid-up shares of 50p nominal value, and capitalization of the company remains unchanged at £10,000. However, now the stock-market price of the shares will be around £5, which hopefully will improve the marketability of the shares. See also SHARE CAPITAL.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

share split

see STOCK SPLIT.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005