Who are the stakeholders in this situation?
In this scenario, the stakeholders are the President of Wichita Medical Corporation, Donald Lennon, Nina Friendly and the minority stockholders. Stakeholders are groups, individuals, members that affect or are affected by the decisions and policies of the company (Weygandt, Kimmel, & Kieso, 2009). Each of the stakeholders in this scenario would be affected by the choice Wichita Medical Corporation would make regarding the issue of bond and shares. The company needs funds to continue with its smooth operations. Donald Lennon who holds 51% of the stock recommends the issue of bond. Conversely, Nina Friendly wants to have the issue of shares.
What are the ethical issues in this case?
The ethical issue in this scenario entails the issue of bond. In the case of Donald Lennon, it would be unethical for him to issue bonds because he wants to retain ownership of the organization. Donald is portraying unethical behavior by trying to make decisions that are in his best interest. The organization will incur additional debts and end up being bankrupt because of the issue of bonds.
What would you do if you were Donald?
If I were the president of Wichita Medical Corporation, I would do what is best for the company. The stakeholders depend on the operations of the company; therefore, to ensure that they are not adversely affected, I would consider the recommendations by Nina Friendly and the minority stockholders. The issuance of bonds will increase the company’s losses due to the growth in interest expense. Issuing shares would be appropriate.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2009). Accounting principles. New York: Wiley.
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