Action (finance)
A action is a document of title delivered by a Joint stock company (i.e a Public limit company or Limited partnership with share capitals). It confers on its holder the property of part of the capital, with the rights which are associated there: To intervene in the business management and to derive an income called from it Dividend.
For a Partnership, one speaks about Partnership share. The shareholder is described as Actionnaire and the whole of the shareholders constitutes the shareholding
Inherent rights for this reason financial
This share of the capital confers on its carrier a right to information on the company, a right to vote, a right to touch a Dividende, i.e. part of the results of the company, and a right on the credit net at the time of liquidations.An action can envisage in its statutes of different the actions categories, some having one or more rights to vote, others having a more or less priority dividend, even alternate titles in the form of Certificat of investment. These various types of titles were created to meet the needs for the investors:
- Certains shareholders which privileges the control of the company (the fact of being determining in the vote of the strategic decisions of the company taken during the General meetings) will prefer actions with multiple right to vote to obtain a majority block. In the absolute, one needs 51% (50% + 1 vote in fact) of the rights to vote to obtain a majority block, but concretely, because of abstention and to the dispersion of the small carriers, less low percentage is often enough.
- Of other shareholders, more interested by the return on investment, will prefer actions with priority dividend.
Emission, transfer of shares
The actions are negotiable, is in purse when the company is with dimensions on a market, from where the use sometimes of the simplifying name of stock exchange action , but which indicates indeed only those with dimensions on one or more purses existing in the world, Private is .
The actions are n the other hand emitted Apport S during the creation of the company, which makes it possible to create its Authorized capital. The shareholders can decide then constantly to sell a part of it with others Investisseur S. the company can emit new actions placed near third Actionnaire in order to increase the capital. In this case, the majority shareholders can lose all or part of the control which they have on their company.
To facilitate such transactions, the actions of the most important companies are generally with dimensions in purse. Any person or organization can constantly buy or sell the actions of various companies there. Often, a given company makes dimension its actions only on only one purse.
Cours and value of the actions
See also: stock exchange Course
The price to which the actions are exchanged on the purses is called the stock exchange courts . It varies according to supply and demand, with a moderating system intended to prevent that the courses are not too erratic.
One names by convention value of an action his stock exchange courts. This course more or less approaches (with possible wide variations, since supply and demand make law) estimates of value made by theoretical methods of evaluation of company. These methods can give only one estimated potential course (what some call the “intrinsic value”) which helps possibly the investor out of purse to make his decisions of purchase and sale.
The problem of the actual value arises more in the absence of quotation out of purse, therefore of reference of price. It is there that the theoretical estimates of value can be used as bases of negotiation in the event of acquisition of a holding.
The value of an action
See also: evaluation of action
The value of an action corresponds at its stock exchange courts. It is the result of the confrontation of the supply and of titles. Several methods evaluation are at the disposal of the Investisseur S to discuss the action considered.
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the value of assessment (patrimonial)
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methods of the multiples of results (comparable)
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methods of actualization (Discounted Cash-flow)
The face value
The face value corresponds to the value of the contribution entering the composition of the authorized capital. To know the face value of an action, it is necessary to divide the authorized capital by the number of actions. This value is hardly of interest. It is advisable to announce that the price of introduction does not correspond systematically to the face value. The issue price can include/understand an issue premium.
Split
One saw a company like IBM, which has more than one billion titles, repurchasing part of his own actions. Of course, like that done as many Dividend S in less to pour with the following exercise, that causes mechanical to make go up the course of the action. Moreover, this operation makes it possible to improve the net earnings per share (BNPA) what is well seen by the financial markets and contributes to the rise of the courses.
Above a certain course, the liquidity of the title can be weakened. IBM thus carried out also splits or division of nominal , replacement of an old action by two new actions of nominal divided half. It is an even deal even if it can be felt like the transmission of an informational signal by the company at the market.
The repurchase of action
A company can repurchase its actions when it lays out of liquidities of surplus.
See too
- Evaluation of action
- Evaluation of company
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