A feature common to both stock splits and stock dividends is

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Business

Magdalena Warren

6 January, 18:42

A feature common to both stock splits and stock dividends is

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Answers (2)

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Darius Hansen · Answer 1

Answer: There is no effect on total stockholders' equity

Explanation:

Stock splits is an when new shares are issued by a company to existing shareholders based on their current holdings. Stock split leads to an increase in the number of shares in a company. It also causes a reduction of market price of the individual shares.

Stock dividend is a dividend that is paid to shareholders as additional shares in the company but not as cash and they are not taxed until the owners sell the shares. The main feature of stock splits and stock dividend is that there is both has no effect on the total stockholders' equity.

Ezekiel Walton · Answer 2

Is that there is no effect on total stakeholder's equity.

Explanation:

When existing shareholders are being paid dividends as shares rather than in cash it is known as stock dividends.

Stock split can be defined as the issuance of new shares to peculiar shareholders to create multiple shares and its always in proportion to their holdings in that particular firm.

A feature common to both stock splits and stock dividends is that there is no effect on total stakeholder's equity meaning that both parameters do not reduce it.