Why do some companies issue new stock to expand, while others borrow money?
New companies are like young people with no credit rating. It may hard or impossible to obtain money through issuing debt. If they can issue debt, they very likely will have to pay high percentage rates of interest. For this reason, they may want to issue stock to raise money. For mature companies, it is a question about what is the appropriate leverage for a company. For instance, debt financing is very appropriate for utilities companies, because they require huge capital to build new facilities, but they have a rather stable income revenue base; therefore, the ability of those companies to repay the debt is very high (and interest rates are generally lower).
