Why do companies split their stock? Why do shareholders like stock splits? |
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Companies are often splitting the value of their large shares into smaller shares because it will help the company into generating of more volume in trading of their share, and it will help in better price discovery, and more liquidity in the trading of the shares of company.
Shareholders are liking the stock splits because it will help them to accumule large number of shares of the company without paying for it and without increasing in their proportional weight of ownership but it will lead to accumulation of a large number of shares and it will help in maximization of the value of the shares as company will grow higher, so it will also means that they will be having more choices in terms of allocation of resources.
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