Final answer:
Internal information on products, revenues, costs, and profits is critical for companies. It helps to reduce the information gap between company insiders and outside investors, leading to easier access to financial capital. As companies grow and data becomes more available, personal knowledge of managers by investors becomes less important.
Step-by-step explanation:
For companies to operate effectively, they need precise information about their business activities, which includes data on products, revenues, costs, and profits. As a company matures and its future profitability becomes clearer, the necessity to know managers on a personal basis diminishes. This is because information related to the company's performance becomes more readily accessible to outside investors like bondholders and shareholders. Consequently, these investors, despite not personally knowing the firm’s managers, may be more inclined to invest as availability of information reduces the imperfect information gap.
Patterns in raising financial capital by businesses often revolve around the concept of imperfect information, where there is an unequal knowledge distribution between those running the firm and those investing in it. Those within the company typically have a better grasp on the firm's potential for future profits, thus influencing investor decisions and the firm's choice of capital sources. Ultimately, the availability of a company's internal business information eases the process of obtaining financial capital in the market.