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QuestionsCategory: Financials QuadrantWhat is the difference between stock split and bonus share
Zen Lim asked 2 months ago
Hi, If a company stock split 1 for 2 as compare to rewarding 1:1 bonus share, the eventual outstanding shares are the same. I read that the difference is that there is a cost to the company for issuing bonus share. How do we read the financials to understand the impact of bonus share? If there is a cost, why would company issue bonus share?  
1 Answers
Victor Chng Staff answered 2 months ago

Hi Zen,

The difference is the dilution.

Bonus share: dilutes the ownership stake of each existing shareholder proportionally
Share split: Each shareholder's total ownership stake remains the same, but they now hold a larger number of shares.

To me, the impact is minimal, and I usually treat it the same.