In case of stock dividends, the shareholder's proportion of ownership in the firm remains the same,and as long as the firm's earnings remain unchanged, so does his or her share of total earnings.

Question

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When a company issues stock dividends, the number of shares outstanding increases, but the proportion of ownership remains the same. Therefore, the shareholder's share of total earnings remains unchanged as long as the firm's earnings remain the same.

In Case of Stock Dividends, the Shareholder's Proportion of Ownership