In case of stock dividend, 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

Quizplus · Accepted Answer

In case of a stock dividend, additional shares of stock are distributed to shareholders, but the proportion of ownership they hold in the firm remains the same. As a result, their share of total earnings, as long as they remain unchanged, will also remain the same, in proportion to their ownership percentage. Therefore, the statement is true.

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