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 ?
There are little studies which have studied the opinion of investors on stock splits and the reasons behind companies splitting stocks.
While the logs are being cut to firewood lengths the ones that don't require splitting
We check the industry-wise splitting events and find the stock splits are across the board and not specific to a small set of industries.
The American Medical Society and American Pharmacists Association oppose mandatory tablet-splitting and recommend against splitting tablets that are modified-release, combination products, unscored, film-coated, friable, or dose-critical.
Pill splitting is just one of the shames coming out of this era of managed cost/mangled care.
The splitting of spirituality and sexuality has meant the splitting of our lives.
Monthly short-interest data are obtained directly from the NYSE for 338 firms out of the original sample of 355 splitting firms that were listed on the NYSE.
Having a split personality, schizophrenia, is not a splitting of the personality into multiple parts, not a Jekyll and Hyde phenomenon, despite the popular hold of the Robert Louis Stevenson story.
Stack splitting may be a great way to bring ballooning share prices down safely--giving shareholders the opportunity to double or triple the value of their stock, should the company continue performing--but not everyone thinks it's all that it's cracked up to be.
reportedly shortens the tool design process by saving 90% of the core/cavity splitting time.
affiliate and transferred to the possessions corporation after 1948; (ii) the cost-sharing method, which permits a return on intangibles if the electing possessions corporation makes a payment to its affiliates according to a statutory formula or a royalty amount determined under sections 367 and 482; or (iii) the profit-split method, which provides a statutory formula for splitting between the possessions corporation and its U.S.
According to Donald Kuspit's owner's manual to acting out in the arts, it's possible to control the on/off switch to acting out's motor or mechanism, the "splitting" Freud first tested in his essay on fetishism.