When a public company issues new shares, the total number of shares traded in a secondary market goes up. Assuming there is no change in the fundamentals of the company and the profitability, I would expect that the share price of the existing shareholders would fall. However, this does not always happen in real life.
A quick Google search says that a company can only offer new shares if they have "unissued capital". My questions are:
- When can a company issue new shares?
- How does it affect the existing shareholders?
- What changes in the balance sheet after such an issue?