Stock exchanges play a pivotal role in managing and facilitating corporate actions like dividends and stock splits. When a company decides to distribute dividends or implement a stock split, the stock exchange ensures that these actions are executed smoothly and transparently.

For dividends, the company announces the amount and record date. The stock exchange verifies this information and disseminates it to investors. On the record date, the exchange identifies shareholders eligible to receive dividends. Once verified, the exchange coordinates the distribution of dividends to shareholders' accounts.

In the case of stock splits, the company decides the split ratio (e.g., 2-for-1). The stock exchange adjusts the stock's price and outstanding shares accordingly, ensuring that the market capitalization remains consistent. This adjustment prevents any disruption in trading and maintains the stock's value for investors.

Stock exchanges also handle the communication between companies and investors during these events. They ensure that accurate information reaches shareholders, preventing misinformation or confusion. The exchange's efficient management of these corporate actions maintains market integrity, instills investor confidence, and supports the smooth functioning of trading.

In summary, stock exchanges serve as intermediaries between companies and investors during corporate actions like dividends and stock splits. Their role is crucial in maintaining market transparency, fairness, and orderliness throughout these events.