If the stock dividend is paid so that cash can be retained to satisfy past-due bills, a decline in market value may result.

Question

Quizplus · Accepted Answer

Paying a stock dividend to retain cash for past-due bills can indicate financial difficulties for the company, which can lead to a decline in market value. Investors may become concerned about the company's ability to manage its debt and financial obligations, which can lead to a decrease in demand for the company's shares and a drop in stock price.

If the Stock Dividend Is Paid So That Cash Can