A stock split occurs when a company divides its existing shares into multiple new shares to increase liquidity. For example, in a 2-for-1 stock split, a shareholder with one share will now have two shares, but the overall value remains the same. This action often makes shares more affordable for investors, potentially attracting more buyers. Companies typically announce stock splits when their share price has risen significantly, making it less accessible to average investors. While a stock split does not change the company's market capitalization, it can positively influence investor perception and trading activity in the stock market.