January 12, 2022 at 6:57 pm #22419
Unlike households, entrepreneurs do not have to take out bank loans to capitalize on more equity in their enterprises. With greater equity, entrepreneurs can financially justify selling more bonds or attract venture capital funding. The other method entrepreneurs can use is to sell shares of their stock share holdings to fund projects out of their built-up equity. Of course, the later method is limited to them maintaining a controlling interest in their enterprises while the former method does not face that restriction.