Which statement is correct?

Question

Quizplus · Accepted Answer

A small stock dividend is one that is less than 20-25% of the total shares outstanding. In this case, the par value per share increases by the same proportion as the stock dividend (e.g. a 2-for-1 stock dividend would result in the par value per share being halved). The value of the capital in excess of par value account also increases by the same proportion as the stock dividend. A large stock dividend, on the other hand, does not affect the par value per share but only increases the number of shares outstanding and the value of the capital in excess of par value account. Additionally, while there is some debate about the impact of stock splits and stock dividends on a firm's market value, empirical evidence suggests that they can have positive effects.

Which Statement Is Correct