Asymmetric Information How Equity Finance is Better than Debt Finance

Ravi S Madapati

The IUP Journal of Financial Economics, 2004, vol. II, issue 4, 38-46

Abstract: The paper presents an analysis which concludes that equity finance solves the problems created by the asymmetry of information, namely, adverse selection and moral hazard. The article empirically looks into the choice of capital based on the risk/reward profile of the investor and lender.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjfe:v:02:y:2004:i:4:p:38-46

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