2. why his failure to maximize the value of the firm is perfectly consistent with
efficiency;
3. why the sale of common stock is a viable source of capital even though managers do
not literally maximize the value of the firm;
4. why debt was relied upon as a source of capital before debt financing offered any tax
advantage relative to equity;
5. why preferred stock would be issued;
6. why accounting reports would be provided voluntarily to creditors and stockholders,
and why independent auditors would be engaged by management to testify to the
accuracy and correctness of such reports;
7. why lenders often place restrictions on the activities of firms to whom they lend, and
why firms would themselves be led to suggest the imposition of such restrictions;
8. why some industries are characterized by owner-operated firms whose sole outside
source of capital is borrowing;
9. why highly regulated industries such as public utilities or banks will have higher debt
equity ratios for equivalent levels of risk than the average nonregulated firm;
10. why security analysis can be socially productive even if it does not increase portfolio
returns to investors.