The difference is largely one of accounting. In the case of a split, the firm simply increases

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The difference is largely one of accounting. In the case of a split, the firm simply increases the number of shares and simultaneously reduces the par or stated value per share. In the case of a stock dividend, there must be a transfer from retained earnings to capital stock. For most firms, a 100 percent stock dividend and a 2-for-1 split accomplish exactly the same thing; hence, investors may choose either one.

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Financial Management Theory And Practice

ISBN: 9780324259681

11th Edition

Authors: Eugene F Brigham, Michael C Ehrhardt

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