Final answer:
A stock dividend results in more shares for the shareholder but does not change the aggregate market value of their investment, thus having no impact on the debit balance of their account.
Step-by-step explanation:
When a corporation declares and pays a stock dividend, the effect on the shareholder is an increase in the number of shares they hold, but the overall market value of these shares remains the same. The reason for this is that the value of each individual share decreases proportionately to the increase in the number of shares, leaving the shareholder's equity unchanged in terms of market value.
One should not confuse this with a cash dividend, where a portion of the company's profits is distributed to shareholders, proportional to the number of shares owned. In the case of a stock dividend, there is no actual transfer of wealth, but rather a cosmetic change in the number of shares representing ownership. Hence, there is no effect on the debit balance of the shareholder's account due to a stock dividend alone.