Please give more detail on reverse split.



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How does stock split affect the shareholders worth?

1 Answer(s)


1

Stock split does not affect the networth of the shareholders.In stock splits the par value of an existing share is reduced and number of outstanding shares increases proportionately.This is a mathematical exercise which will not have any bearing on the reserves and capital of the company.In stock split company does not transfer any money from reserves and surplus to shareholders account. So shareholders wealth will not be affect only the no of shares owned will increase and price of each share will decrease proportionately.