What is a primary effect of transfer restrictions on corporate shares?

Transfer restrictions on corporate shares are designed primarily to control ownership and protect the company’s interests. When a corporation imposes restrictions on the transfer of its shares, it ensures that only suitable parties can acquire them, which can be crucial for maintaining the desired ownership structure and preventing unwanted external influence.

By controlling who can buy or sell shares, the corporation can also help manage relationships among shareholders, facilitate succession planning, or adhere to specific regulatory or strategic goals. This enables a company to retain a certain level of stability and coherence in its ownership, which can be beneficial for long-term planning and operations.

In contrast, the other options don't accurately reflect the primary impact of such restrictions. Transfer restrictions do not inherently increase the overall stock market value or enhance liquidity; in fact, they might reduce liquidity since it can limit the ease with which shares can be sold or exchanged. Additionally, while transfer restrictions can influence the value and perception of shares, they do not automatically lead to the dilution of existing shares, which typically occurs through the issuance of new shares rather than restrictions on transferability.