Stock dividends and stock splits should, at least conceptually, have the same effect on shareholders' wealth.

Question

Quizplus · Accepted Answer

Both stock dividends and stock splits increase the number of shares held by shareholders, while reducing the value per share proportionally. This means that while the total value of the shares held by shareholders increases, the value of each individual share decreases. Therefore, the overall effect on shareholders' wealth is the same for both stock dividends and stock splits.

Stock Dividends and Stock Splits Should, at Least Conceptually, Have