Though the companies split the shares for a reason, they ensure the existing shareholders Shareholders A shareholder is an individual or an institution that owns one or more shares of stock in a public or a private corporation and, therefore, are the legal owners of the company. read more, reducing the per-share amount for traders. It is shown as a part of the owner's equity in the liability side of the company's balance sheet. They increase the outstanding shares Outstanding Shares Outstanding shares are the stocks available with the company's shareholders at a given point of time after excluding the shares that the entity had repurchased.

The companies that make their shares publicly available to investors keep a particular number of units outstanding.

The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals. Stock splits are a decision a company takes in consultation with its board of directors Board Of Directors Board of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders.

When companies split stocks, it indicates their positive growth and progress, leading to decreased share prices building an investor base as shares become more accessible.

Forward and reverse splits are two broadly classified categories of stock splits.

The publicly traded companies decide on splitting stocks in consultation with the board of directors.

Stock splits are a process whereby a company increases the quantity of shares to reduce their prices, making them more accessible to retail investors.

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