Final answer:
Corporations declare stock dividends or stock splits to reduce the market price of a share, making it more attractive to investors. This does not increase retained earnings or ownership percentage but can increase stock liquidity and attractiveness.
Step-by-step explanation:
Corporations may declare stock dividends or undertake a stock split with the objective of reducing the market price of a share of stock, making it more affordable and thus more attractive to a broader range of investors.
This action does not directly increase a corporation's retained earnings nor does it necessarily increase a stockholder's percentage of ownership in the company. Instead, it can increase liquidity in the stock and potentially broaden the base of investors. A stock split, for example, increases the number of shares outstanding while reducing the price per share proportionately, leaving the stockholder's overall equity in the company unchanged.