For some stocks, when the price appreciates to a certain target price, the management may decide to split the existing share to smaller shares. This is to improve liquidity. Since going public in 1965, McDonald’s has paid twelve stock splits.
Similarly, when the share price is too low, the management may decide not consolidate the shares in a reverse stock split. SGX listed Aims Amp Industrial REIT recently did a 5 to 1 reverse stock split to consolidate its share so that it looks more appealing at $1 than at $0.20 to investors.
So what is the main benefit of stock split? from the underline words, you will be able to tell that the benefit is mainly psychology. The value of the shares you held doesn’t change, it is just the size of the number of shares.
It also greatly distorts a stock investors research when you think whether ......
For some stocks, when the price appreciates to a certain target price, the management may decide to split the existing share to smaller shares. This is to improve liquidity. Since going public in 1965, McDonald’s has paid twelve stock splits.
Similarly, when the share price is too low, the management may decide not consolidate the shares in a reverse stock split. SGX listed Aims Amp Industrial REIT recently did a 5 to 1 reverse stock split to consolidate its share so that it looks more appealing at $1 than at $0.20 to investors.
So what is the main benefit of stock split? from the underline words, you will be able to tell that the benefit is mainly psychology. The value of the shares you held doesn’t change, it is just the size of the number of shares.
It also greatly distorts a stock investors research when you think whether ......
