Zen Lim asked 7 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 7 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.
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