- company issues additional common shares to existing stockholders (ex. 2 for 1 - when everyone is given an extra share for every share they own - immediately reduces price) - Done when the share price has gotten too high and is no longer comparable to competitors --> helps make it look more affordable - Underlying value of company has not changed - Usually initially boosts demand and drives up prices - NO financial statement effects (just an increase in # of shares outstanding/decreases EPS + reduction in par value of stock on 10k) -