Question

Why do you think debt offerings are more common than equity offerings and typically much larger as well?

WITH references so I may read about it! please

Answer 1

Debt offering are usually more common than equity offerings because debt offerings does not involve giving up ownership in the company. Debt offerings are also large because it is easier to make interest payments on a loan , than it is to raise money based on the current market valuations fo a company.

To raise money through equity a company can either obtain it form a private investor or through an IPO , which requires billions of money. With equity , the stakeholders are now a part of the ownership of the company and the cost of capital is the claim of the stakeholders on the income of the company.

Companies that are more stable with have consistent cash flow [refer raising money through the use of debt.