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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 ?
Thus, it seems possible that companies issue scrip dividends to invest the cash saved in non-positive-NPV projects.
One possible explanation for why companies pay scrip dividends could be that managers issue the scrip option for their own benefit, for example, to trade on insider information.
It does so by comparing the financial performance of firms that issued scrip dividends over the period 1987-1992 to industry-matched control firms that paid only cash dividends.
A deeper understanding of the influences of these additional factors will enable us to understand why firms pay scrip dividends.
1) Since scrip dividends increase the issued share capital, the total amount of dividends paid must be increased for the dividend-per-share to be increased or maintained.
4) See Sections 230 and 249 to 251 of the Inland and Corporation Taxes Act 1988 (as amended) and Sections 141 and 142 of the Taxation of Chargeable Gains Act 1992 for the tax treatment of scrip dividends.
1 do not analyze the enhanced scrip dividends in this paper because they were issued as "one off" by a relatively small number of companies in 1993.
10) For example, I find that 66% of the constituents of the FTSE 100 Index, the London Stock Exchange 100 largest companies, pay scrip dividends.
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.
If a scrip dividend is used by managers to signal a favorable outlook to the market, then scrip-paying firms' subsequent earnings and dividends should be higher.