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. Business Judgment Rule

    A regulation that helps to make sure a corporation's board of ...
  4. Letter of Intent - LOI

    1. An agreement that describes in detail a corporation's intention ...
  5. Spinoff

    The creation of an independent company through the sale or distribution ...
  6. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
Related Articles
  1. Investing Basics

    The Basics Of Corporate Structure

    CEOs, CFOs, presidents and vice presidents: learn how to tell the difference.
  2. Options & Futures

    How To Tell If A Company's In Trouble

    Observing a company's behavior can prove beneficial for the mindful investor. Know the signs before you make a reactionary move.
  3. Bonds & Fixed Income

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  4. Options & Futures

    Governance Pays

    Learn about how the way a company keeps its management in check can affect the bottom line.
  5. Investing

    What is a stock-for-stock merger and how does this corporate action affect existing shareholders?

    First, let's be clear about what we mean by a stock-for-stock merger. When a merger or acquisition is conducted, there are various ways the acquiring company can pay for the assets it will receive. ...
  6. Investing

    Who is responsible for protecting and managing shareholders' interests?

    The average shareholder, who is typically not involved in the day-to-day operations of the company, relies on several parties to protect and further his or her interests. These parties include ...
  7. Investing

    A corporate bond I own has just been called by the issuer. How can a company legally take away my bond? ...

    Bond issues can contain what is referred to as a call provision, which is a right afforded to the issuing company enabling it to refund the bondholder the par value of his/her bond (perhaps including ...
  8. Fundamental Analysis

    Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens when more shares are issued.
  9. Fundamental Analysis

    How do you use Microsoft Excel to calculate liquidity ratios?

    Learn how to calculate the most common liquidity ratios in Microsoft Excel by inputting financial figures from a company's balance sheet.
  10. Economics

    America's Most Notorious Corporate Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center