Which of the following is NOT generally considered a cost of going public?
A)Agency Costs of Managerial Discretion: Separating ownership and control leads to such costs, though they can be mitigated with monitoring, incentive contracting, etc.
B)Information Asymmetry: Disclosure requirements may compromise the firm's strategic position in the industry.
C)Taxes: Public firms face higher federal and state tax rates than private firms.
D)Performance Pressures: Management will face pressure for performance from investors, the financial press, equity research analysts, and bond rating agencies.
E)Distractions: Management is often distracted by time-consuming investor-relations tasks, such as press releases, personal visits from or to major shareholders, etc.

Question

Quizplus · Accepted Answer

Taxes are not generally considered a cost of going public because both public and private firms are subject to federal and state tax rates based on their income, not their public or private status. The other options (A, B, D, E) are recognized costs or challenges associated with going public.

Which of the Following Is NOT Generally Considered a Cost