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 ?
Announced at the NAB 2004 Public Radio Engineering Conference in April, the Split-Level Combining System was developed by Harris Principal RF Design Engineer George Cabrera and Steve Fluker, director of engineering for Cox Radio, Orlando, Fla.
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.
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.
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).
Sir Ronnie said its modern neo-Georgian-style with low fence and split-level inquiry desk presents "a softer image".
But gatecrashers trashed every room in the split-level bungalow, slashing a pounds 3,000 sofa andsmashing a pounds 400 antique mirror.
The dance occurred on two split-level stages and is a sequence of exciting, unexpected dance phrases.
Added during a remodel of the slender, split-level back garden, the 18foot-long structure runs from the eave of the house to a retaining wall.
It includes a fully adjustable deluxe seat with suspension, a split-level door, rear window that opens, and front-, rear-, and roof-mounted wipers.