Final answer:
A stock split and stock dividend increase the number of shares but not their total value, as they are structured to preserve the company's value on the balance sheet, reward investors, and enhance stock liquidity.
Step-by-step explanation:
The correct answer to how a stock split and stock dividend impact shareholders without changing the company's value on the balance sheet is B. The value of the stock split and the value of the stock dividend increase the number of shares but not the total value of those shares.
When a company performs a stock split, it increases the number of outstanding shares by dividing each share into multiple shares; however, this doesn't affect the total equity of the company or the balance sheet since the proportional value of each shareholder's ownership doesn't change. Similarly, a stock dividend distributes additional shares to shareholders as a percentage of currently held shares. While this increases the number of outstanding shares, the value of the company remains the same because the stock dividend is allocated from retained earnings, which is already part of the shareholders' equity on the balance sheet.
This does not dilute the value as it is a proportionate distribution, nor does it cause any offsetting effects as suggested in options C and D. These actions are ways for the company to reward investors, increase the liquidity of its stock, or adjust the share price to a more desirable trading range without altering the firm's balance sheet valuation.