Why do so many companies bother to split their stocks?
It's easy to write off stock splits as a ploy aimed merely at attracting small-time retail investors who, it seems, would rather buy a parcel of 100 stocks of low denomination than 50 stocks of twice that denomination. Similarly, giving existing holders 200 shares, say, in place of the 100 they held before apparently really does make some of them, at least, feel better off. Even though the total cost and value remain the same.
But can this really be true? Surely it doesn't take the wit of
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Janet Dignan
Janet Dignan is a graduate of Otago University in New Zealand, where she read philosophy. From 1979 to1982 she was head of information at Linklaters, with responsibility for internal and external information resources for its offices in London, Hong...
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