Corporate Action

AAA

DEFINITION of 'Corporate Action'

Any event that brings material change to a company and affects its stakeholders. This includes shareholders, both common and preferred, as well as bondholders. These events are generally approved by the company's board of directors; shareholders are permitted to vote on some events as well.

INVESTOPEDIA EXPLAINS 'Corporate Action'

Splits, dividends, mergers, acquisitions and spinoffs are all examples of corporate actions. For example, a company may decide to split its shares 2:1, leaving shareholders with twice as many shares as they had before. Bondholders are also subject to the effects of corporate actions, which might include calls or the issuance of new debt. For example, if interest rates fall sharply, a company may call in bonds and pay off existing bondholders, then issue new debt at the current lower interest rates.

RELATED TERMS
  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Stock Split

    A corporate action in which a company divides its existing shares ...
  3. Spinoff

    The creation of an independent company through the sale or distribution ...
  4. Business Judgment Rule

    A regulation that helps to make sure a corporation's board of ...
  5. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  6. Letter of Intent - LOI

    1. An agreement that describes in detail a corporation's intention ...
Related Articles
  1. The Basics Of Corporate Structure
    Investing Basics

    The Basics Of Corporate Structure

  2. How To Tell If A Company's In Trouble
    Options & Futures

    How To Tell If A Company's In Trouble

  3. What Are Corporate Actions?
    Bonds & Fixed Income

    What Are Corporate Actions?

  4. Governance Pays
    Options & Futures

    Governance Pays

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center