Stock Dividends, Stock Splits, and EPS Effects
How Share Changes Affect Investors
Stock dividends distribute additional shares to existing shareholders, while stock splits increase the number of shares by reducing the value assigned to each individual share proportionately. Neither transaction directly changes total shareholders' equity.
Tip
Historical EPS must be adjusted retrospectively for stock splits and stock dividends to ensure meaningful comparisons.
Summary
Stock dividends and stock splits affect share counts and EPS calculations but generally do not change total shareholders' equity.