Chapter 14, Problem 14.7BYP

(a)

To determine

Ethical Issue: M Corporation has paid cash dividends since 60 quarters consecutively. As a result of which there is cash drain in the company. Corporation has decided that a stock dividend instead of cash dividend should be declared. M Corporation has asked its vice president to issue a press release in order to convince the stockholders’ for stock dividend.

To determine: The stakeholders in the given situation.

(b)

To determine

Whether the decision taken by L to issue stock dividend is unethical.

(c)

To determine

The effect of a stock dividend on corporations ’stockholders’ equity accounts and suitability of dividends for investors.