Final answer:
True, risk-averse managers facing uncertainty are likely to minimize leverage to reduce financial risk as established firms with a positive profit outlook can attract investors based on available financial metrics.
Step-by-step explanation:
Managers who are risk-averse and uncertain about future outcomes would indeed tend to minimize combined leverage. Leverage in a business context refers to the use of borrowed funds to increase the potential return on investment. For risk-averse managers, the idea of taking on high levels of debt is less appealing because it intensifies the stakes of the business operations. If the future is uncertain and potentially volatile, minimizing leverage would reduce the firm's fixed costs and, therefore, its risk of facing financial difficulties during tough economic times. As firms become established and their profit outlook becomes favorable, investors, even those not familiar personally with the managers, are generally more willing to provide capital because the business's financial metrics speak for themselves.