Chapter 11: Ethics Case: BYP11-10 Learning Team C Karen Boardman, Aaron Hall, Carla Morfesy, Racquel Morris-Gourdine,

Andria Saxon ACC/400 April 2, 2012 Kris Tontis, CPA

Chapter 11 BYP11-10

Who are the stakeholders in this situation?

Is there anything unethical about President Mailors intentions or actions?

What is the effect of a stock dividend on a corporations stockholders equity accounts? Declaring stock dividends has no effect on a corporation's stockholders' equity accounts. Stock dividend increases the number of shares outstanding. By issuing dividends a company rewards stockholders by increasing the number of outstanding shares, allocating the newly issued shares proportionately to investors' holdings. However, the retained earnings account loses its worth; while the common stock account and additional paid-in capital account see their amounts increase. Therefore, stockholder's equity "per share" goes down. Distributing stock dividends enables company executives to build better and tighter ties with shareholders, to keep the conversation about liquidity management going and to use company money to fund long-term activities.

Which would you rather receive as a stockholdera cash dividend or a stock dividend?Why?