Myriad Corporate Actions That Deliver Additional Benefits| Espresso

Myriad Corporate Actions That Deliver Additional Benefits

Stocks are one of the markets that are preferred playgrounds for traders and investors worldwide. The number of individual investors crossed the figure of 1.2 crores in the financial year 2022. The same reflects the quality of trading experience traders and investors receive from trading in this market. Additionally, it provides an insight into the accommodating nature of this very market. 

Published on 20 February 2024

Other than regular trading activities, traders and investors capitalize on their investments through myriad corporate actions. Reputed share trading apps provide you with the needed news and updates regarding corporate actions, enabling you to make informed decisions regarding the market changes that may proceed. In this blog, we will assimilate the concept of corporate actions and their influence on the overall trading experience. 

Corporate Action-Significance for Traders and Investors

Corporate actions are events initiated by esteemed organizations, causing an effect on the holdings of the shareholder. These facilitate price fluctuations, trading opportunities, additional gains, and portfolio adjustment changes, affecting the overall trading experience. Corporate actions are carried out by the directors of esteemed organizations. Hence, traders and investors keep a tab on the director's meetings to have a better trading experience. It enables them to make the needed changes to their trading strategies and instruct their share market investment app to open or close a trade or remain irrespective of the same. 

Different Corporate Actions That May Increase Possible Gains

There are myriad corporate actions carried out by the board of directors of esteemed enterprises. However, the following are some of the most prominent among the same:-

Bonus Shares

Traders are indemnified as additional shares as a reward from the esteemed organizations as a bonus. Shares such as received are bonus shares. Companies do the same to proliferate their equity base. In this, the value of stocks remains the same. The number of shares possessed by an investor increases. Traders and investors receive bonus shares in defined proportions. 

Stock Splits

When enterprises need to appreciate the liquidity, they increase the number of shares with stock splits. Through this corporate action, companies provide an additional number of shares to the shareholders. However, the total outstanding amount remains the same. Additionally, companies make stocks more affordable without diminishing the overall stock value. When companies initiate a stock split, they announce the specified proportion in which they will conduct the same. Expressing the same in simpler terms, for a 2-for-1 stock split, traders and investors with 100 shares will likely receive 200 shares after the process. In this process, the value of individual shares does not remain the same, they depreciate by the same proportion. It means for 100 shares, if the value of each share is x, making the outstanding value 100x. When the stock split occurs, for a 2-for-1 split, the individual value of the stock becomes x/2, keeping the outstanding value intact to 100x. The more affordable rate of the same share affects the crowd mentality, causing a behavioral change towards the stock. Higher liquidity affects bid-ask spreads, making things more efficient for traders and investors. However, there are some significant drawbacks associated with stock splits that traders and investors must consider to plan their trades accordingly. Traders and investors must manage short-term volatility in stocks caused by crowd expectations. It enables them to avoid unintended outcomes from trade placement. Employing short-term and long-term trading strategies with additional caution is the most practical measure to do the same. 


The profit percentage shareholders receive from esteemed enterprises for holding their shares are dividends. Shareholders may receive monthly, quarterly, semi-annual, or annual dividends, subject to the company's policy. In general, companies provide dividends to shareholders based on their face value. The following are the two types of dividends:-

  • Cash Dividends: These are paid in cash. 
  • Stock Dividends: A payment from a company to shareholders in shares rather than cash. 

Given the stakes held by traders and investors, they receive this as a reward from esteemed organizations. The following are some of the factors that may affect the dividends traders and investors may receive:-

  • Company policy for dividends
  • Returns they are receiving from each share
  • Demand for the company's stock

The following is the symphony of advantages traders and investors receive through their dividends:-

  • These may add value to the investment. 
  • Usually, dividend-paying stocks are more steady. 
  • These may offer a steady source of return on investment. 

Concluding Remarks

Traders and investors explore the market using an online share market app to implement their conduits for financial alchemy. Corporate actions are company-initiated actions through which traders and investors could benefit. With the best share trading apps, traders and investors can receive real-time updates, enabling them to benefit from stock splits, bonus shares, and dividends. 

Chandresh Khona
Team Espresso

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