the owner-manager (OM) would sell a part of his/her equity shares to outside investors, mostly because OM (1) needs external funds to finance growth & expansion; (2) wants to reduce the risk of business failure (risk sharing); and (3) enjoys the perks at the expense of outside investors.

(i) Suppose that OM, instead of selling equity shares, decides to sell unsecured long-term debt like debenture (under the firm's name). Would reasonable investors in the financial market be interested in buying the firm's debenture? If not, why not?

(ii) Do you think the role of auditors to those debenture-holders should be different from that to the equity-holders?

Hint for (i) - In reality, stock IPO (or venture capital) is only a plausible option for initial external financing for OM. So, short answer to the question would be no (because of market failure).