Reference no: EM132614875

The president of XYZ Semiconductor Corporation (XYZ) made this statement in the company's annual report:

"XYZ's primary goal is to increase the value of our common stockholders' equity."

Later in the report, the following announcements were made:

1. The Company contributed P1.5 million to the symphony orchestra in Manila, its headquarters city.
2. The company is spending P500 million to open a new plant and expand operations in Taiwan. No profits will be produced by the Taiwanese operation for 4 years, so earnings will be depressed during this period versus what they would have been had the decision been made not to expand in Taiwan.
3. The company holds about half of its total assets in the form of Philippine Treasury Bonds, and it keeps these funds available for use in emergencies. In the future, though, XYZ plans to shift its emergency funds from Treasury bonds to investment in common stocks (common shares of stocks).

Question 1: Discuss how XYZ's stockholders might view each of these actions and how the actions might affect the stock price.