Basic Corporate Actions Every Stock Investor must know

Explore corporate actions and their effects on stock prices, including dilution, stock splits, buybacks, and cash distributions, and learn how market signals and management actions drive price moves.

Understand how issuing new shares dilutes your ownership and voting power. See how your equity and voting rights shrink when a company creates and allocates new shares to others.

Understand how dividends provide shareholder returns from a company's cash flow, and how management weighs paying dividends against reinvesting for growth through capital allocation.

Explore how dividends work, debunk the myth of free money, and learn how the ex-dividend date and overnight price adjustments affect portfolio value and market response.

Choose to collect dividends and reinvest to compound wealth over the long term, while checking profits and cash flow to assess dividend sustainability through the payout ratio.

Explore ex-dividend pricing with a worked example: a $10 stock carrying a $0.50 dividend falls to $9.50 after the ex-dividend date. The 50-cent payout goes to overnight holders.

Use an Excel calculator to input current market price and dividend per share from the company report, then compute the ex-dividend share price and see a chart update automatically.

Learn how special dividends are one-time payouts driven by non-recurring profits and why investors exclude them from recurring dividend forecasts.

Learn how special dividends from non-recurring events influence share prices, the role of dividend announcement and ex-dividend dates, and how prices adjust while the total portfolio stays unchanged.

Learn how to react to special events announcements, reinvest dividends, and assess when a one-time special dividend signals temporary profits from shortages rather than lasting gains.

Calculate the ex-dividend price drop: a $5 stock with a $0.10 dividend falls to $4.90 after the ex-dividend date, with the dividend going to shareholders.

Use the excel calculator tool to input market price per share and dividends, including special dividends, then let the software compute metrics and display the impact on a share-price chart.

Explore capital reduction and cash distribution to return idle cash to shareholders. Liquidate subsidiaries, create an asset light balance sheet, or cancel share fractions to align with investor aims.

Capital reductions behave like dividends, with no net worth creation, and the ex-dividend entitlement date transfers value to shareholders while market price adjusts downward by the distribution amount.

Correct the entitlement and reinvest cash from capital reductions back into the market, supporting a more efficient capital structure and higher returns on assets and equity over the long term.

Walks through a basic corporate action example: a $1 per-share entitlement reduces the ex-entitlement price from $15 to $14, with the $1 paid to shareholders.

Explore the Excel calculator tool for modeling capital reduction and cash distribution per share, using the yellow input cells and guidance from the company announcement to see price movements.

Learn how share buybacks reduce shares outstanding and raise metrics like earnings per share and assets per share. Explore common reasons behind buybacks, from employee stock options to signaling undervaluation.

Assess responses to a share buyback; you usually need not act, as buybacks can indicate undervaluation and reward shareholders, prompting valuation checks and decisions to hold or sell.

When a company announces a buyback, you usually don't need to react; buybacks reward shareholders and may signal undervaluation, so perform your own valuation and decide to hold or sell.

See how a company's buyback changes earnings per share and assets per share using a step-by-step worked example, highlighting effects of share count and price relative to net asset value.

Explore an excel calculator tool to analyze a company's assets, earnings, and shares, and simulate impact of a share buyback on earnings per share and net asset value per share.

Understand how bonus shares work and why they don't increase value, a case of financial engineering, and how management uses them to attract investors and boost liquidity.

Explain why markets often respond little to bonus shares, outline the ex-dividend date and entitlement, and apply the dilution formula to show price adjustment and preserved portfolio value.

When Borna share announcements occur, you usually do nothing and simply collect the bonus share, as it does not affect your portfolio or net worth.

Demonstrates a one-for-two bonus issue and how it affects the ex-bonus share price, using a 0.5 market price and dividing by two plus one.

Use an Excel calculator tool to compute bonus shares from market price and the ratio. Read the company announcement to extract the exact ratio, so the calculator updates automatically.

Explore how stock splits increase share count in two-for-one or three-for-one ratios without changing overall value, and why liquidity and trading range considerations motivate management.

Markets rarely react to bonus share announcements, viewing them as financial engineering with limited value creation. Share splits shift prices and entitle overnight holders to new shares.

learn how to react to company announcements and adjust your long-term stop loss to protect your investments as share prices move.

Compute the post-split price by dividing $10 by 2 to $5, and note that only overnight holders receive the new shares after the split.

Demonstrate an excel calculator tool that automates stock-split calculations by entering the current market price from Google Finance or Yahoo Finance and the number of new shares, with everything pre-programmed.

Understand how reverse stock splits, or share consolidations, reduce share count while ownership remains unchanged. This financial engineering aims to avoid penny stock stigma, yet creates no value.

explain how reverse stock splits can trigger negative market reactions despite no change in fundamentals, ex-dividend date effects, and how post-split share counts affect price and ownership.

Explore an Excel calculator tool for reverse stock splits, updating post-split share price and share count automatically as you adjust the split ratio, current price, and the magic number.