Practicing Success
Debt normally does not cause............ |
A dilution of control A dilution of flexibility A dilution of cost A dilution of equity |
A dilution of control |
Debt normally does not cause a dilution of control. A public issue of equity may reduce the managements’ holding in the company and make it vulnerable to takeover. This factor also influences the choice between debt and equity especially in companies in which the current holding of management is on a lower side. |