Investing term

What is Corporate action?

Any event initiated by a company that changes its securities or distributes value to holders.

A corporate action is any event a company initiates that changes its shares or distributes value to holders — dividends, stock splits, mergers, spin-offs, rights issues. Some happen automatically, others need a decision from you by a deadline. Knowing the difference matters, because missing a deadline can mean the broker takes a default action on your behalf.

For example

A company announces a rights issue letting you buy discounted shares by a deadline — ignore it and the opportunity (and any value) simply lapses.

Corporate action is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

See the lesson →

Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.Deal spreadThe gap between the announced deal price and the live market price of the target's stock.
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