Issuing Debt Instead of New Equity in a Closely Held

Multiple Choice

Issuing debt instead of new equity in a closely held firm more likely causes owner-managers to

A) work harder than they would if equity had been issued.
B) consume more perquisites because the cost is passed on to the debtholders.
C) enjoy more leisure time than they would with an equity issue.
D) accept more unprofitable projects.
E) shirk their duties as they have less capital at risk.