Merge/Split shares

[greene345]

After causing this bug, I got to thinking about share merging and splitting as a normal practice for CapLab. I'm not sure if it should be done automatically, and I haven't thought enough about the exploits this could cause, but what about having either automatic share split/merges at certain prices, or manual share split/merges?

For example, if I have a subsidiary that is $10 per share and I have 100 million shares, I think I'd rather have 1 million shares at $1000. On the flip side of the coin, however, if I have a company that has 1 million shares each at say, $10,000 per share, I think I'd rather have 10 million shares at $1000.

[counting]

As of exploit, it may have the same issue as in real world stock.

Split usually has less problem, but rarely I heard it goes beyond 3-for-1, and it's real benefit is just liquidity (people can buy 1 share more easily, the number of public share holders be able to buy it increases). But since in game the numerous small share holders are anonymous and infinite liquid, it should have no effect what so ever. (perhaps it could be used to increase the effectiveness of investor relationship funds?)

However the problem will be stock merge (or more commonly we called them reverse split), since 1-4, even 1-10 were heard of, it is possible without upper limit, in theory generating a situation that you have 1 share with a price of 1 billion, which no one can touch. Even in less extreme case, 1000 share with a price of 1 million, since the basic unit is a million, during mergers someone may end up having less than 1 share. In real life, this situation is dealt with paying cash to those having fractional share, hence effectively reduce the number of share holders for regulation or management purpose (if you can squeeze out enough fractional shares, you can increase overall controlled shares percentages. There is a technique called reverse/forward split, where first you use 1-100 to cashed out those has less than 100 shares, and split them again 100-1 back to the original price level).

So all in all, in game, if this is implemented, it has to set with an upper limit (max 3-1, and 1-10 perhaps) in split and merge, also with a time period between two consecutive merge or split (exclude reverse/forward split). And we have to deal with fractional shares. Also the stock price chart function need to be updated to consider the adjustment of price in history (normalized to its current price).

[greene345]

Just a quick follow up, is there any input on this from the Dev(s)?

[David]

The following has already been implemented:

Stock Merge
All publicly-traded stocks are required to maintain a minimum bid price of at least $1.00 per share. When a stock's price falls below $1.0, a stock merge (also called reverse stock split) will occur automatically.

Info on the official CapLab web site: http://www.capitalismlab.com/stock-mark ... ement.html

[counting]

let's wait for the other part the actual split implementation

No more people want to share their thoughts about the condition required for stock split?