1. When considering a firm's capital structure, tensions between debtholders and shareholders can impact the firm by all except:

a. limiting its ability to match its competitive environment with optimal funding options

b. constraining opportunistic behavior and managerial discretion through debtholder control measures

c. firms needing to engage in riskier business activities because the firm must respond to changing competitive pressures will most likely select equity financing

d. changing the corporate governance structure from internal control to external control if higher equity financing is selected

1. In general, corporate governance is presented from the perspective of a firm with widely dispersed ownership, but in practice, that model of ownership faces a range of specific problems. Which of the following is an exception:

a. the influx of fresh capital through new listings and a deeper capital market, thus increasing shareholder participation

b. easy access to relevant information about the firm's operations aided by a collaborative management team

c. the limited effect of large institutional investors, including banks, hedge funds and other large financial players, and the pooling of pension funds

d. the principal-agent problem arises and company performance can suffer, to the detriment of the owners (the shareholders)