Overview
A corporate action is an event initiated by a public company that affects the securities issued by the company. This can include actions such as dividends, stock splits, mergers, and acquisitions.
Types of Corporate Actions
- Dividends: Payments made to shareholders from a company's earnings.
- Stock Splits: An increase in the number of shares outstanding while reducing the par value of each share.
- Mergers and Acquisitions: The consolidation of companies or assets.
- Rights Issues: An offer to existing shareholders to purchase additional shares at a discount.
Impact on Shareholders
Corporate actions can significantly impact the value of shares and the overall investment strategy of shareholders. It is essential for investors to stay informed about these actions.