What effect do stock dividends have on firm value?

A) They increase total firm value because more shares are outstanding.
B) They decrease total firm value because EPS is lowered.
C) They increase total firm value because each shareholder has a larger share of the firm.
D) They have no effect on firm value.

Firm Value

The total worth of a company, determined by its assets, earnings potential, and market value of its shares, reflecting both tangible and intangible factors.

Stock Dividends

A form of dividend paid to shareholders in the form of additional shares rather than cash, reflecting a company's desire to reinvest its earnings.

Shareholder Share

Represents the portion of a company's equity owned by an individual or institutional shareholder.