stock split

(redirected from stock splits)
Also found in: Dictionary, Thesaurus.
Related to stock splits: Reverse Stock Splits

Stock split

Occurs when a firm issues new shares of stock and in turn lowers the current market price of its stock to a level that is proportionate to pre-split prices. For example, if IBM trades at $100 before a two-for-one split, after the split it will trade at $50, and holders of the stock will have twice as many shares as they had before the split. See: 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.

stock split

See split.

Stock split.

When a company wants to make its shares more attractive and affordable to a greater number of investors, it may authorize a stock split to create more shares selling at a lower price.

A 2-for-1 stock split, for example, doubles the number of outstanding shares and halves the price. If you own 100 shares of a stock selling at $50 a share, for a total value of $5,000, and the company's directors authorize a 2-for-1 split, you would own 200 shares priced at $25, with the same total value of $5,000.

Announcements of stock splits, or anticipated stock splits, often generate a great deal of interest. Buyers may simply want to take advantage of the lower share price, or they may believe that the split stock will increase in value, moving back toward its presplit price.

While 2-for-1 splits are the most common, stocks can be also be split 3-for-1, 10-for-1, or any other combination. In addition, a company can reverse the process and consolidate shares to reduce their number by authorizing a reverse stock split.

stock split

see SHARE SPLIT.

stock split

or

share split

an increase in the number of SHARES in a JOINT-STOCK COMPANY that 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 EXCHANGE values the company at £100,000, making each share worth £10. The company wishes to attract a wider shareholder base by reducing the market PRICE of each share, so it undertakes a two-to-one stock split, giving existing shareholders two new 50p shares for each 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 £5, which it is hoped will improve the marketability of the shares. See also SHARE CAPITAL.

Stock Split

Additional shares of stock distributed to shareholders at no cost. The number of shares received are a ratio of the shares owned. The basis of the original shares is generally apportioned equally to the total shares owned after the split.
References in periodicals archive ?
"I'd say there is a sense of urgency, the stock split appears to be a step in the direction of getting that Hong Kong listing," Luria told CNBC.
Al khaliji, Dlala Holding and Qatar Oman Investment will implement stock split on June 10; QIIB and Alijarah Holding (June 11); QNB, Ahlibank Qatar and Islamic Holding (June 12); Qatar Islamic Bank and Doha Bank (June 13) and Masraf Al Rayan (June 16).
The consumer goods and services sector, which comprises nine constituents, has the June 17-20 window to implement the stock split.
Pursuant to the reverse and forward stock splits, stockholders holding fewer than 250 shares of the company's common stock immediately prior to the effective time of reverse stock split will not receive fractional shares in the reverse stock split, but will instead have their shares cancelled and converted into the right to receive a cash payment of USD3.35 per pre-reverse stock split share.
Dolly (1933) surveyed managers of eighty-eight companies issuing stock splits; the finding of the survey was that the main motive for issuing stock splits is to widen the distribution base among the shareholders.
Baker et al., (1980) surveyed 100 chief finance officers on their perceptions about stock splits. The conclusion drawn from the 63 responses received was that stock splits serve to keep the stock price in an optimal range, thereby, increasing liquidity and the number of shareholders.
Stock splits, recognized in academia as cosmetic changes effected through simple accounting procedures, should not affect the future cash flows of the firm directly.
In an effort to explain both why stock splits exist and the abnormal stock price behavior surrounding their announcement, researchers have predominantly applied signaling theory and the optimal trading price range hypothesis.
Despite a volatile market during the first half of 2000, Ruettgers felt that a stock split would create value for existing investors, while also making the stock more attractive to new investors.
Stock splits are often announced along with a dividend increase.
Our study examines the relationship between stock splits and the ownership mix of firms.
M2 EQUITYBITES-August 12, 2013-RBC Life Sciences Inc reports launch of reverse stock split & forward stock split(C)2013 M2 COMMUNICATIONS http://www.m2.com