How to Create Value through Financing 1.Fool Investors Empirical evidence suggests that it is hard to fool investors consistently. 2.Reduce Costs or Increase Subsidies Certain forms of financing have tax advantages or carry other subsidies. 3.Create a New Security Sometimes a firm can find a previously- unsatisfied clientele and issue new securities at favorable prices. In the long-run,this value creation is relatively small,however. 22 How to Create Value through Financing How to Create Value through Financing 1. Fool Investors • Empirical evidence suggests that it is hard to fool investors consistently. 2. Reduce Costs or Increase Subsidies • Certain forms of financing have tax advantages or carry other subsidies. 3. Create a New Security • Sometimes a firm can find a previously￾unsatisfied clientele and issue new securities at favorable prices. • In the long-run, this value creation is relatively small, however