Stockholders of a company may be reluctant to finance expansion by issuing more equity because
A)leveraging with debt is always a better idea.
B)their earnings per share may decrease.
C)the price of the stock will automatically decrease.
D)dividends must be paid on a periodic basis.

Question

Quizplus · Accepted Answer

Issuing more equity can dilute existing shareholders' ownership, potentially decreasing earnings per share, which may make stockholders reluctant to finance expansion this way.

Stockholders of a Company May Be Reluctant to Finance Expansion