Which of the following concerns would cause debt financing to be more attractive than equity financing?

Question

Quizplus · Accepted Answer

Debt financing can be more attractive than equity financing in situations where there is an excess free cash flow problem, as debt can discipline management by obligating them to make regular interest payments, thus reducing the cash available for wasteful spending. It can also mitigate the theft problem by reducing the funds available for potential misappropriation.

Which of the Following Concerns Would Cause Debt Financing to Be