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What are the potential impacts of issuing debt relative to an additional stock? A. Issuing debt dilutes shareholder equity, which influences ownership concentration. If a
What are the potential impacts of issuing debt relative to an additional stock? A. Issuing debt dilutes shareholder equity, which influences ownership concentration. If a shareholder held 2% of the stock, they will now have less than 2%. B. There is a tax incentive to the corporation when issuing debt. The corporation may be able to write off interest payments when paying corporate profits. You can think of this like writing off mortgage interest or student loan interest in your personal taxes. C. Debt can not bankrupt a corporation. If the corporation does not pay shareholders dividends, it will be forced into filing bankruptcy. D. Bond holders, or investors in debt, can vote to change the corporation's board
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