Corporate Action
Corporate action is a term used to describe any event initiated by a publicly traded company that will bring an actual change to the securities issued by the company. Corporate actions are typically initiated by the board of directors and can include events such as stock splits, dividends, mergers and acquisitions, rights issues, and spin-offs. Corporate actions are important to investors because they can have a significant impact on the value of their investments.
History of Corporate Action
The concept of corporate action has been around for centuries, but it wasn’t until the late 19th century that the term was first used. The term was first used in the United States in the early 1900s, when the Securities and Exchange Commission (SEC) was established. Since then, corporate action has become an important part of the financial landscape, with companies taking corporate actions to increase shareholder value, raise capital, and restructure their businesses.
Comparison of Corporate Actions
| Action | Description | Impact on Shareholder Value |
|---|---|---|
| Stock Split | A stock split is when a company divides its existing shares into multiple shares. | Positive |
| Dividend | A dividend is a payment made by a company to its shareholders. | Positive |
| Mergers and Acquisitions | Mergers and acquisitions involve the combining of two or more companies. | Varies |
| Rights Issues | A rights issue is when a company issues new shares to existing shareholders. | Varies |
| Spin-Offs | A spin-off is when a company splits off a portion of its business into a separate entity. | Varies |
Summary
Corporate action is an important concept in the financial world, as it can have a significant impact on the value of investments. Corporate actions can include stock splits, dividends, mergers and acquisitions, rights issues, and spin-offs. For more information on corporate action, investors can visit the websites of the SEC, the Financial Industry Regulatory Authority (FINRA), and other financial websites.
See Also
- Stock Split
- Dividend
- Mergers and Acquisitions
- Rights Issues
- Spin-Offs
- SEC
- FINRA
- Shareholder Value
- Capital Raising
- Restructuring
