Why are large stock dividends accounted at par value?

ALL _______ Dividends increase the supply

of stock, which decreases the price

Large stock dividends have a significant

effect on the price of stock, so the current

market value can NOT be used to value

large stock dividends – and the only

remaining choice is PAR or STATED VALUE

Small stock dividends have only a minor

effect on prices, so the current stock price

is still used to value the stock dividend

Reduction in the price due to an increase

in numbers of shares is called “dilution