What do companies get when their stock splits???I just want to know why do stocks split?? elaborate if you can

Answer 1

It is all about liquidity.

In theory, a two for one split gives a company twice as many shares at half the price.

Stocks usually trade in lots of 100. It is more expensive to trade odd lots (fewer than 100 shares at a time). Therefore, if a company's share price is high, the stock becomes illiquid, because not many people can afford to buy 100 shares. Companies will split their stock to make it more affordable -- which increases liquidity.

The lower prices also make it more profitable for the market maker -- since the bid-ask spread is a larger percentage of the stock's value. This gives the market maker an incentive to keep the market for that stock very liquid.

Answer 2

The theory goes that stocks priced in the 30 to 50 dollar range are more popular than ones trading at higher prices, so companies like to keep their stocks trading in that range. The split the shares to reduce the price into that range.

Answer 3

This is doen to decrease the price of the stocks on the Stock Exchange, generally its a 50-50 split halfing the value of the stock option & thus allowing more investors to invest

Answer 4

they get nothing. They hope shares will rise as more people can afford them but this has proven foolish with institutional investors like mutual funds & pension funds holding 80%+ of many stocks.