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Shareholders prefer high risk projects when facing a high probability of bankruptcy because High risk projects usually bring high rewards. Shareholders have the residual claim
Shareholders prefer high risk projects when facing a high probability of bankruptcy because
High risk projects usually bring high rewards.
Shareholders have the residual claim on a company.
Creditors have the residual claim on a company, and therefore bear the risk.
There is a good chance the government will rescue them in bankruptcy.
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