Roland carlson is the president founder and majority owner

Reference no: EM13610205

Roland Carlson is the president, founder, and majority owner of Thebeau Medical Corporation, an emerging medical technology products company. Thebeau is in dire need of additional capital to keep operating and to bring several promising products to final development, testing, and production. Roland, as owner of 51% of the outstanding stock, manages the company's operations. He places heavy emphasis on research and development and long-term growth. The other principle stockholder is Jana Kingston, who as a nonemployee investor owns 40% of the stock. Jana would like to deemphasize the R & D functions and emphasize the marketing function to maximize short-run sales and profits from existing products. She believes this strategy would raise the market price of Thebeau's stock.

All of Roland's personal capital and borrowing power is tied up in his 51% stock ownership. He knows that any offering of additional shares of stock will dilute his controlling interest because won't be able to participate in such an issuance. But, Jana has money and would likely buy enough shares to gain control of Thebeau. She then would dictate the company's future direction, even if it meant replacing Roland as president and CEO.

The company already has considerable debt. Raising additional debt will be costly, will adversely affect The beau's credit rating, and will increase the company's reported losses due to the growth in interest expense. Jana and the other minority stockholder express opposition to the assumption of additional debt, fearing the company will be pushed to the brink of bankruptcy. Wanting to maintain his control and to preserve the direction of "his" company, Roland is doing everything to avoid a stock issuance and is contemplating a large issuance of bonds, even if it s means the bonds are issues with a high effective interest rate.

1. What action would you take and why would you take this action? Explain and discuss.

2. What are the ethical issues in this case?

3. What would you do if you were Roland?

Reference no: EM13610205

Questions Cloud

For or from agi deductions roberta is an accountant : for or from agi deductions. roberta is an accountant employed by a local firm. during the year roberta incurs the

Harry and sally formed the evergreen partnership by : harry and sally formed the evergreen partnership by contributing the following assets in exchange for a 50 percent

A basket of eggs contains 18 eggs 7 of which are cracked if : a basket of eggs contains 18 eggs 7 of which are cracked. if we randomly select 8 of the eggs for hard boiling what is

Using electronic equipment the astronaut measures the time : to measure the acceleration due to gravity on a distant planet an astronaut hangs a 0.102-kg ball from the end of a

Roland carlson is the president founder and majority owner : roland carlson is the president founder and majority owner of thebeau medical corporation an emerging medical

Cirrus inc purchased certain plant assets under a deferred : cirrus inc. purchased certain plant assets under a deferred payment contract. the agreement was to pay 40000 per for

Find the standard score z such that the area above the mean : find the standard score z such that the area above the mean and below z under the normal curve is 0.3975.find the

Month budgeted sales may 46000 june 50000 july 52000 : month budgeted sales may 46000 june 50000 july 52000 august 48000 the cost of goods sold is 65 and the desired

A piston-cylinder device containing argon gas undergoes an : a piston-cylinder device containing argon gas undergoes an isothermal process at 100 c during which the pressure

User Account

All Pages