FIN 3717 Chapter : Ch 1 Solutions
Document Summary
Some advantages include: limited liability, ease of transferability, ability to raise capital, and unlimited life. In response to sarbanes-oxley, small firms have elected to go dark because of the costs of compliance. The costs to comply with sarbox can be several million dollars, which can be a large percentage of a small firm"s profits. A major cost of going dark is less access to capital. Since the firm is no longer publicly traded, it can no longer raise money in the public market. The controller"s office handles cost and financial accounting, tax management, and management information systems, while the treasurer"s office is responsible for cash and credit management, capital budgeting, and financial planning. Therefore, the study of corporate finance is concentrated within the treasury group"s functions: to maximize the current market value (share price) of the equity of the firm (whether it"s publicly traded or not). In the corporate form of ownership, the shareholders are the owners of the firm.
