SMITH BRAIN TRUST – History shows that where financial auditing goes, litigation and reputational risk follow. While auditors incur risk of being sued and having their credibility damaged for substandard performance, their clients subsequently face exposure, but differently.
How Ownership Structure Affects the Cost of Debt
While privatization comes with benefits — like not being beholden to market speculation or a chorus of diverse shareholders — it also carries risks. Privately held companies, for instance, have limited access to public equity markets, which complicates their ability to keep operations afloat when cash is tight.
Public companies — owned by shareholders with stock — have the advantage of being able to easily tap into financial markets when they need money, either by selling more equity as stock or often by issuing portions of their debt as bonds. Private companies — owned by the company’s founders, a management group or private investors such as a private equity group — can also sell off their debt as public bonds. But for them, the cost is much higher. New research from Smith School professor Hanna Lee has implications for firms weighing different ownership types and how that will impact the cost of capital. Read more...
The Smith School is happy to welcome the following new professors to the school:
Accounting & Information Assurance