A. In a stock dividend more shares are issued to existing shareholders. Since there is no increase in income from this event, but there are more shares outstanding, future earnings per share will decrease as a result of this.
B. A stock dividend does not in itself increase shareholder wealth. The stock dividend provides more shares to each shareholder, but the total value of the shares remains unchanged.
C. A stock dividend has no impact on the equity of the company. Therefore, there is no effect on the debt-to-equity ratio.
D. A stock dividend does not impact the size of the firm.
