CFA Level I · CFA Level I Exam · Organizational Forms, Corporate Issuer Features, and Ownership
Which feature is most likely an advantage of remaining a private corporation rather than going public?
The advantage of staying private is greater flexibility to pursue long-term strategies without constant public market scrutiny of short-term results. Easier access to large capital and greater share liquidity are benefits of being public, not private.
- AEasier access to large amounts of capital
- BGreater flexibility to pursue long-term strategies without quarterly market scrutinyCorrect
- CGreater liquidity of the owners' shares
Explanation
Private firms avoid public market pressure for short-term results and costly disclosure. Access to large capital and share liquidity are advantages of public firms.
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