Some people--including the former chairman of the Federal Reserve Board of Governors (Ben Bernanke)--have argued that one advantage of corporate debt from the stockholders' standpoint is that the existence of debt forces managers to focus on cash flow and to refrain from spending too much of the firm's money on private plane and other "perks." This is one of the factors that led to the rise of LBOs and private equity firms.

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The statement argues that the existence of debt forces managers to focus on cash flow and refrain from spending too much of the firm's money on private plane and other "perks," and this has led to the rise of LBOs and private equity firms. Ben Bernanke, the former chairman of the Federal Reserve Board of Governors, is also mentioned as someone who has supported this argument.

Some People--Including the Former Chairman of the Federal Reserve Board