Why Companies Issue Corporate Actions?
• To return profits to shareholders. A public company may declare a cash dividend to be paid on each outstanding share. • To influence the share price. If the price of a stock is too high or too low, the stock’s liquidity suffers. Overpriced stocks will not be affordable to all investors, and underpriced stocks may be delisted. Corporate actions such as stock splits or reverse stock splits increase or decrease the number of outstanding shares resulting in a higher or lower stock price. • For corporate restructuring.
