Generally, a stock dividend is declared to improve the marketability of the shares by reducing the market price per share, increasing the number of shares outstanding, and making it possible to have a wider ownership of the stock.

Question

Quizplus · Accepted Answer

A stock dividend does indeed increase the number of shares outstanding, which in turn reduces the market price per share and may make the stock more appealing to a wider range of investors. However, it is worth noting that a stock dividend does not actually generate any new value for investors; it merely changes the way that value is distributed among shareholders.

Generally, a Stock Dividend Is Declared to Improve the Marketability