4. Launching the Rights Issue

Rights issue is when the company offers their share holders to buy the stocks before anyone else can buy them. Only when and if they refuse or are done with their buying, the remaining shares are offered to others. Such step is only taken when the company needs an additional capital. The reason why the stock prices are lower compared to existing market price is that the company can’t retain the higher price or even the same because it would not be a profitable deal for the investors buying shares.

5. Mergers and Acquisition

This is a situation which is intentionally done to reach a specific goal but is a highly risky corporate action to be taken as most of the time the objective is not achieved. Usually the acquirer company pays premium to the acquired company’s shareholders, so that the price of the target of acquisition goes up for a short-term. If a merger takes place then the stock prices goes up but if the market senses some negative aspect then the stock suffers ruthlessly.

Hence it can be said that corporate events or actions are a good accelerator for the company along with its proficient management. So these tips should be a keeper for an investor. He should have a keen eye on announcements as always there remains a communication gap between an investor and company.