Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 2Q
Summary Introduction
To determine: The reason why might such a firm decide to go public.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Many companies that go public with an IPO don’t actually need additional cashto continue growing their operations. Why might such a firm decide to go public?
Which of the following is an incentive for firms to conduct an IPO?
Underwriter and advisor fees are typically substantial.
Venture capitalists will be more able to sell their shares.
Reporting requirements are more stringent for public companies.
The company may become subject to a hostile takeover.
Why investors are willing to invest in high-tech firms instead of conventional financial sources?
Chapter 18 Solutions
Intermediate Financial Management (MindTap Course List)
Knowledge Booster
Similar questions
- Which of the following statements is NOT true about Initial Public Offerings? A. An IPO occurs when a private company sells stock to the public for the first timeB. IPOs are less risky than a typical stock market investment since they are typically smaller companiesC. When an IPO occurs, a company raises money from public investors that they use to grow their businessD. IPOs are risky investments since the company going public often has a limited track record of performancearrow_forwardSuppose you need additional capital to expand,and you sell some stock to outside investors. If youmaintain enough stock to control the company,what type of agency conflict might occur?arrow_forwardWhich of the following is not a financing decision? A Should the firm borrow money from a bank or sell bonds? B Should the firm shut down an unprofitable factory? C Should the firm buy or lease a new machine that it is committed to acquiring? D Should the firm issue preferred stock or common stock?arrow_forward
- What would be the answerarrow_forwardWhy would it be desirable to switch from an S corporation to C corporation once the business is growing fast?arrow_forwardWhat is meant by the goal of maximization of shareholder wealth? The government has passed regulations that require pollution controls, development restrictions, and pay equity over the years. But, can a firm still achieve the maximization of shareholder wealth? How?arrow_forward
- In times of crisis companies are often seen to be paying stable dividends. The question however is, should companies retain these dividends in the firm to protect employment and investments? Should companies preserve their financial flexibility in times of financial crises? Discuss the ethics of dividends and illustrate how dividends and related issues (e.g. dividend taxation) can play a part in rethinking the capitalist paradigm.arrow_forwardCarrington and Genevieve agree that they would like to try to increase the value of the company stock. Like many small business owners, they want to retain control of the company and do not want to sell stock to outside investors. They also feel that the company's debt is at a manageable level and do not want to borrow more money. What steps can they take to increase the price of the stock? Are there any conditions under which this strategy would not increase the stock price?arrow_forwardKidman corporation is trying to raise capital. What method would be the least risky to raise capital if it has a less-than-favorable credit rating?arrow_forward
- Can a firm still achieve the maximization of shareholders' wealth even if the government has passed regulations that require pollution controls, development restrictions, and pay equity over the years? how?arrow_forwardYour corporation needs additional capital to fund an expansion. Discuss the advantages and disadvantages of raising capital through the issuance of stock. Would debt be a better option? Why or why not?arrow_forwardDiscuss the topic of maximizing shareholder wealth. This topic has been researched and studied for many years, with mixed results. For example; Irving Fisher, a prominent American Economist, argued that maximizing shareholders wealth should be management’s primary goal. Conversely, Sollars and Tuluca suggested that shareholders should only be rewarded with returns that are commensurate with the risk they take. Explain the advantages and disadvantages of wealth maximization from the perspective of a company’s Chief Financial Officer. Include the effect on company stakeholders – internal (managers, employees) and external (suppliers, shareholders).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT