W17-2 Shirley Yu, president of SY Corporation, is concerned about several large stockholderswho have been very vocal lately in their criticisms of her leadership. She thinks they mightmount a campaign to have her removed as the corporation's CEO. She decides that buyingthem out by purchasing their shares could eliminate them as opponents, and she is confidentthey would accept a "good" offer. Yu knows the corporation's cash position is decent, so it hasthe cash to complete the transaction. She also knows the purchase of these shares willincrease earnings per share, which should make other investors quite happy. (Earnings pershare is calculated by dividing net income available for the common shareholders by theweighted-average number of shares outstanding. Therefore, if the number of sharesoutstanding is decreased by purchasing treasury shares, earnings per share increases.)Instructions:Answer the following questions.(a) Who are the stakeholders in this situation?(b) What are the ethical issues involved?(c) Should Yu authorize the transaction?

a) The stakeholders are those people who have a interest in the business. They can affect or get…

Answered: Answer the following questions. (a) Who…

Answer the following questions. (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved? (c) Should Yu authorize the transaction?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

W17-2 Shirley Yu, president of SY Corporation, is concerned about several large stockholders
who have been very vocal lately in their criticisms of her leadership. She thinks they might
mount a campaign to have her removed as the corporation's CEO. She decides that buying
them out by purchasing their shares could eliminate them as opponents, and she is confident
they would accept a "good" offer. Yu knows the corporation's cash position is decent, so it has
the cash to complete the transaction. She also knows the purchase of these shares will
increase earnings per share, which should make other investors quite happy. (Earnings per
share is calculated by dividing net income available for the common shareholders by the
weighted-average number of shares outstanding. Therefore, if the number of shares
outstanding is decreased by purchasing treasury shares, earnings per share increases.)
Instructions:
Answer the following questions.
(a) Who are the stakeholders in this situation?
(b) What are the ethical issues involved?
(c) Should Yu authorize the transaction?

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