One reason why a company may choose a stock split over a stock dividend is that the stock split does not reduce Retained Earnings.

Question

Quizplus · Accepted Answer

A stock dividend reduces Retained Earnings.A stock split is an increase in the total number of authorized shares with a pro rata decrease in the par value of the shares.No journal entry is needed as there is no change in stockholders' equity.

One Reason Why a Company May Choose a Stock Split