10-03-2009, 04:47 AM
Dear,
The reductions, reconstructions, splits and amalgamations of shares always leave roughly an equal corresponding impact on market values. Market capitalization typically remains same. You must know that reduction is made normally against accumulated losses which always reduce equity (book value) in financial statements. So normally there is no value loss either in terms of book values (net equity basis) as well as in terms of market capitalization.
However, in ingenuine markets like ours, there can arise other factors which may affect the market value which create a situation where one cannot exactly judge the impact of reduction in share capital on market values.
Regards,
Kamran.
The reductions, reconstructions, splits and amalgamations of shares always leave roughly an equal corresponding impact on market values. Market capitalization typically remains same. You must know that reduction is made normally against accumulated losses which always reduce equity (book value) in financial statements. So normally there is no value loss either in terms of book values (net equity basis) as well as in terms of market capitalization.
However, in ingenuine markets like ours, there can arise other factors which may affect the market value which create a situation where one cannot exactly judge the impact of reduction in share capital on market values.
Regards,
Kamran.
