Ask Colin

Why don't some successful companies create more liquidity in their shares eg. Reece?

You might add Warren Buffett here, with Berkshire Hathaway. How much more successful could he have been if he had split his shares? Or maybe not.

Companies are listed on the stock market to raise capital and to provide a market for shareholders. If you don't need to raise more capital, why worry about liquidity? Reece has not made a rights issue since 1990 (maybe longer - that is as far as I checked). They split the shares into 5 in 2002, which did make them more liquid for the shareholders.

Other considerations might be:

1. Share registers are expensive to run, the more shareholders and the more activity, the more it costs. If you don't want to raise more capital, why bother?

2. They may not want too many institutions on the register.

3. They may want to discourage trading and stick with solid long-term investors.

4. The tight nature of the register is actually good for the price - there is a scarcity value.

There are probably other reasons I have not thought of.