Affects of declaring dividends and liquidating
For example, if a corporation has 100,000 shares outstanding, a 2-for-1 stock split will result in 200,000 shares outstanding.
Since the corporation's assets, liabilities, and total stockholders' equity are the same as before the stock split, doubling the number of shares should bring the market value per share down to approximately half of its pre-split value.
Since every stockholder received additional shares, and since the corporation is no better off after the stock dividend, the value of each share should decrease.
A dividend is a distribution of part of the earnings of the company to its equity shareholders.
The board of directors of the company decides the dividend amount to be paid out to the shareholders.
For example, if a corporation had 100,000 shares outstanding, a stockholder who owned 1,000 shares owned 1% of the corporation (1,000 ÷ 100,000).
After a 2-for-1 stock split, the same stockholder still owns just 1% of the corporation (2,000 ÷ 200,000).