The authors examine the choice between private and public incorporation of an asset for an entrep reneur who hires a manager with superior information about the asset' s return. Public incorporation is shown to be preferred when (1) capi tal market issue costs are low, or (2) the asset's idiosyncratic risk is high and the owner is either sufficiently risk averse or sufficie ntly "optimistic" about the asset's expected return. Thus, those as sets deemed most valuable by their owners will be be publicly incorpo rated. The authors also explore the impact of incorporation mode-priv ate versus public-and information structure on the firm's investment policy and ownership distribution. Copyright 1988 by American Finance Association.