The PSE Edge announced this morning a follow-up regarding $ALT's disclosure about the change in par value of its shares from Php 0.05 to Php 0.25. The stated reason for the change is said to be the improvement of the "liquidity of the shares of the company for the benefit of shareholders."
This is not something new to me. I already read a lot of articles about this. To check if my memory is still working, I asked the help of Mr. Google.
According to Share Investor Educational Series, the change in par value whether it is stock split (also known as share subdivision) or reverse stock split (share consolidation) "has no effect on the value of the individual shareholder's overall shareholdings relative to the total market valuation of the company".
As for the claimed improvement of the liquidity of the shares of the company, it is actually the opposite. Share split achieves such improvement in liquidity not the share consolidation, which the company just did. However, SIES doesn't completely dismiss that reverse share split has no benefits. By increasing the par value of its shares, $ALT actually may attract institutional buyers. Finally, if SIES is correct, $ALT increased the par value of its shares "to meet the minimum trading bid size to ensure its listing status on the stock exchange".
This is not something new to me. I already read a lot of articles about this. To check if my memory is still working, I asked the help of Mr. Google.
According to Share Investor Educational Series, the change in par value whether it is stock split (also known as share subdivision) or reverse stock split (share consolidation) "has no effect on the value of the individual shareholder's overall shareholdings relative to the total market valuation of the company".
As for the claimed improvement of the liquidity of the shares of the company, it is actually the opposite. Share split achieves such improvement in liquidity not the share consolidation, which the company just did. However, SIES doesn't completely dismiss that reverse share split has no benefits. By increasing the par value of its shares, $ALT actually may attract institutional buyers. Finally, if SIES is correct, $ALT increased the par value of its shares "to meet the minimum trading bid size to ensure its listing status on the stock exchange".
Source: https://blog.shareinvestor.com/share-consolidations-and-share-splits/
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