Owners of small private corporations have great financial freedom. They can lease assets to the business, put family members on the payroll, and award themselves lavish perks. And they don’t have to maximize the market value of their stock. They can put the long-term health of the business ahead of short-term earnings growth, and they can be as conservative or as daring about borrowing as they wish.
A version of this article appeared in the November 1987 issue of Harvard Business Review.