Student Confusion about Small and Large Stock Dividends

Abstract

When students learn about stock dividends, they may be confused about several factors: why companies issue stock dividends, why investors might like or dislike stock dividends, how to account for stock dividends, and why there is a distinction between and difference in the way we account for small versus large stock dividends. This paper gives some background on stock dividends and then focuses on the different ways of accounting for small and large stock dividends. Perhaps it is time for the Financial Accounting Standards Board to reconsider if these methods are appropriate. Some suggestions for possible changes are given (Smith, 2016).