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Question for stock pros...

alledanalledan Member Posts: 19,541
edited March 2002 in General Discussion
What determines when a stock will split? Is it decided by the board or is it set automatically?
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Comments

  • timberbeasttimberbeast Member Posts: 1,738 ✭✭
    edited November -1
    I believe that it is determined by the Board of Directors at will, and don't believe that there are any constraints placed upon it. Most splits are just to re-configure the price-per-share, and don't affect the value you own. Gunstocks splits, on the other hand, are definitely determined by the board from which they are made, taking into account moisture content, grain configuration, humidity in the given area, the drying process, the finish or lack thereof, and ....uh...I guess they're both kinda the same!
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  • Gordian BladeGordian Blade Member Posts: 1,202 ✭✭✭✭✭
    edited November -1
    The only reason for a stock split is that the board of directors wants the stock to be more attractive for the small investor to buy in small unit amounts. Also, there are psychological factors because when people see a stock splitting, they think it is splitting because it has gone up a lot (which is usually true) and so it will continue to go up a lot (which is often not true). Some closely-held companies never split their stock and have individual share prices in the thousands of dollars.
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  • robsgunsrobsguns Member Posts: 4,581 ✭✭
    edited November -1
    There is also a reverse split, to increase the price of the stock, to attract investors to it, because some wont invest in a cheap stock, thinking its worthless.
    SSgt Ryan E. Roberts, USMC
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  • bartobarto Member Posts: 4,734 ✭✭
    edited November -1
    if the board had a miniscule crack in it when you made the stock, it will probably split.
    the hard stuff we do right away - the impossible takes a little longer
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  • talontalon Member Posts: 150 ✭✭✭
    edited November -1
    The maximum number of shares is set in the Charter. While the Board can call a Split, if the total number of Shares would exceed the Charter limit, then the Shareholders, in a vote, would have to authorize an increase in the maximum limit. If they don't, the Board could not cause a split to occurr. Reverse Splits are not hampered by this rule.
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