 Apart from distributing cash as dividend among the shareholders, PERM can also distribute some non-cash instrument among the shareholders as dividend, and that non-cash instrument is termed as the stock dividend. In stock dividend, if the firm is distributing its own shares among the shareholders, then this stock distribution or stock dividend is termed as a stock split. And if the stock distribution takes the shares of other companies that the parent company is distributing among its own shareholders and their distribution of other firms shares among the parent's firms shareholders is termed as a spin-off. Stock split generally takes place where the dividend rate goes as higher as over 50 percent. Stock dividend does not carry any cash distribution among the shareholders. This means that there is no change in the firm's value. Means there is no change in the assets, liabilities, and equity of the firm. However, the outstanding numbers of the firm increases in the market and due to this, there is a reduction in the stock price of the firm's share in the market because there is no change in the equity, but the number of outstanding shares has been increased and this increase then causes the share price to go down. Stock dividends are not taxed. So this means that there is no real consequences of this factor upon the firm and its shareholders as well. If there is no change in the firm value due to stock split, then why the firms go for stock split? What is the reason behind this stock split? In fact, the firms do so in order to keep the share prices in a range that the firm believes to be an attractive range for the smaller shareholders in the market. In this way, the stock becomes more attractive for the small investors and its liquidity causes its prices to go more higher. The firms also do not want their share prices to fall to a much lower value. So for a stock with much fall in its price, the company can also go for a reverse of the stock split and due to this, the number of shares will be reduced and this reduction will cause the share prices to go up. So we can say that the combination of stock split and its reverse allows a firm to keep the share prices in a desired range. By spin-off, we mean a scenario where a firm may distribute the shares of its subsidiary among its shareholders rather than distributing its own shares and the shareholders then can trade these shares separately from the shares of their parent firm. Ultimately, the parent firm can dispose of the subsidiary's shares in the open market and can distribute the cash proceeds among the shareholders as a cash dividend. In this way, the firm avoids the transaction cost associated with such type of sale that will be borne by the shareholders at their own. Also, this type of special dividend is not taxed by the tax authorities as a cash distribution.