What is the difference between a stock dividend and a stock split?
| What is the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declare a 100% stock dividend or a 2-for-1 split? Assume that either action is feasible. |
d. The Tax Code encourages companies to pay a large percentage of their net income in the form of dividends.
e. A company that has established a clientele of investors who prefer large dividends is unlikely to adopt a residual dividend policy.
f. If a firm follows a residual dividend policy then, holding all else constant, its dividend payout will tend to rise whenever the firm’s investment opportunities improve.
Chapter 14: Distributions to Shareholders: Dividends and Repurchases Questions
Book Title: Financial Management: Theory and Practice
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