Which action will most likely reduce the number of a company's shares outstanding?

A reverse stock split is an action that consolidates the number of a company’s outstanding shares, effectively reducing the total number. In a reverse stock split, a company reduces its number of shares while increasing the share price proportionately. For example, in a 1-for-10 reverse split, every ten shares that shareholders own will be consolidated into one share, resulting in the total number of shares outstanding being significantly reduced.

This action is often utilized to boost the stock price to meet exchange listing requirements or to improve the perception of the stock in the market. Unlike other options presented, such as a spinoff, seasoned equity offering, or stock dividend, a reverse stock split is specifically designed to decrease the number of shares outstanding while maintaining the overall equity value of the company.

In contrast, a spinoff involves creating a new independent company through the sale or distribution of new shares, which would not reduce the number of shares outstanding in the original company. A seasoned equity offering increases the number of outstanding shares by issuing new shares to raise capital. Finally, a stock dividend distributes additional shares to current shareholders, thereby increasing the shares outstanding.