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Explain the Following as Factors Affecting the Choice of Capital Structure: Control - Business Studies

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ConceptConcept of Capital Structure

Question

Explain the following as factors affecting the choice of capital structure:

Control

Solution

Control: Equity shareholders are regarded as owners of the company as they have complete control over the company. Owners and existing shareholders have complete control over the company as they employ more of debt securities.

If management wants to keep control in its own hands ⇒ More debt

If management can share control with others ⇒ More equity

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Solution Explain the Following as Factors Affecting the Choice of Capital Structure: Control Concept: Concept of Capital Structure.
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