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A temporary document that represents a portion of a share of stock, often issued after a stock split or spin-off.


1. A private sector substitute for currency. Historically, scrip was used in logging and mining communities dominated by a single company, and employees had to buy goods from the company store. Presently, it is more closely associated with gift certificates, gift cards, and re-loadable debit cards. Militaries also occasionally pay soldiers in scrip when they are on deployment. In Australia, buyout offers including stock in place of or in addition to cash are known as scrip bids. See also: Money.

2. An IOU from a publicly-traded company that is short on cash. Such a company pays dividends in scrip until it resolves its liquidity problems.


A certificate that can be exchanged for a fractional share of stock. Scrip is distributed as the result of a spinoff, a stock dividend, or a stock split in which the stockholder would be entitled to a fractional share of stock. For example, the owner of a single share would receive scrip for one-half a share in the event the issuer declared a three-for-two stock split.


Scrip is a certificate or receipt that represents something of value but has no intrinsic value. What's essential is that the issuer and the recipient must agree on the value that the scrip represents.

For example, in the past, after a corporate stock split or spin-off, a company might issue scrip representing a fractional share of stock for each share you owned. On or before a specific date, you could combine the certificates and convert the value they represented into full shares.

But most companies today make a cash payment for fractional shares based on the closing price of the stock on a specific date.

References in periodicals archive ?
Although one year subsequent to the payment of scrip dividends may be too short a period, an extension may produce confounding effects and misspecification of long-horizon tests.
15) I have also used other measures of cash shortage, such as interest cover and net cash flow from operations over interest paid, and find that companies that issue scrip dividends do not appear to be short of cash.
Firms that issue scrip dividends do not report larger recoverable ACT, do not have lower taxable profits, and do not generate higher overseas sales than the control firms.
Firms that pay scrip dividends appear to be highly levered and exhibit significantly higher dividend yields than does the control group.
These results imply that scrip dividends are not offered by companies that suffer from ACT problems.
Firms announce their intention to pay scrip dividends when they announce their quarterly, interim, or final earnings.
12) As in Lang, Stulz, and Walkling (1991), a variable identifying firms that simultaneously have low investment opportunities and high cash flow is constructed to separate the free-cash-flow explanation of scrip dividends from the cash-shortage proposition.
In addition to the test sample, I construct a control sample by matching every company that paid scrip dividends with a similar company that paid only cash dividends.
9) Column 3, Table 1, reports the number of companies in each industry group that paid scrip dividends.
Three proxy variables capture the taxation impact on the decision to issue scrip dividends.