The C suite (CEO, CFO, etc...) would rather use debt over equity as the costs of debt
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The "C" suite (CEO, CFO, etc...) would rather use debt over equity as the costs of debt (interest) are deductible and debt does not vote at annual shareholder meetings. Also, investors want a larger return (dividends) than debt costs (interest) even though debt costs are required payments.
Unless equity is required, it is only used to maintain or shift control. For example, Microsoft has kept its stock price low so that the stock is widely held, and it is difficult to gain control through stock ownership. Bill Gates only owns about 4% of the company.
What advantages does equity finance have?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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