Stock split
In one sentenceDividing each outstanding share into a larger number of shares with a lower nominal value, so the number of shares rises and their price falls without changing the value of what the shareholder owns.
Simply put
A company usually does this when its share price has risen a lot, to make it easier for small investors to trade. No accounting entry changes the balances: capital stays the same, and only the nominal value and the number of shares change.
The split itself does not increase the shareholder's wealth: they own more shares at a lower price.
Worked example
A shareholder owns 1,000 shares priced at 100 SAR each with a nominal value of 10 SAR, and the company decided to split each share into two shares.
Shares after the split1,000 × 2 = 2,000 shares
Price and nominal value after the split100 ÷ 2 = 50 SAR, and 10 ÷ 2 = 5 SAR
Value before the split1,000 × 100 = 100,000 SAR
Value after the split = 2,000 × 50100,000 SAR (unchanged)
Don't confuse it with
Bonus sharesThey increase capital by a transfer from retained earnings, and the nominal value stays the same.