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Define who the stakeholders are in this situation

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Question - Nick Earnst is the 52% owner of the outstanding stock of Real Company. As the founder and president of the company, Nick believes that it is the right time to develop some new and promising products. He intends to finance the research and development costs through issuance of debt. However, the other principal shareholder, David Green, who owns 40% of the stock doesn't agree with him. The company has already got a considerable amount of debt, and David is concerned that additional debt may be dangerous in terms of bankruptcy. He claims that the company should be financed by issuance of stock. Nick, on the other hand, tries to avoid a stock issuance because he's that it will dilute his controlling interest.

Required -

1. Define who the stakeholders are in this situation and discuss the ethical issues regarding this case.

2. How would you act if you were Nick?

Reference no: EM132573528

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