Final answer:
Issuing new debt in a closely held firm is most likely to cause the owner-manager to consume more perquisites, with the cost being passed on to the debtholders (option A). This results from the tax shield provided by the debt and the potential for increased agency costs due to conflicts between managers and debtholders.
Step-by-step explanation:
When a closely held firm is considering how to acquire financial capital, it often faces a choice between issuing new debt and issuing new equity. Issuing new debt means taking on loans or selling bonds, which obligates the firm to make interest payments regardless of its income. On the other hand, issuing new equity involves selling ownership stakes in the company, which doesn't require regular payments but does dilute the owner's control over the company and involves answering to a board of directors and shareholders.
Given these considerations and the choices presented in the multiple-choice question, the most apt scenario is option A. The owner-manager may consume more perquisites because the cost is passed to the debtholders. When debt is issued, interest payments are a cost to the business, which can act as a tax shield, reducing the firm's taxable income. However, the obligation to make those payments whether the firm is profitable or not can constrain cash flow. Moreover, it adds agency costs due to the conflict of interest that can arise between managers (who may seek to increase their own welfare through perquisites) and debtholders (who bear the cost).
Thus, when a closely held firm chooses to issue debt over equity, it could lead to an increase in perquisite consumption by the owner-manager at the expense of debtholders, aligning with the principle of agency costs described in corporate finance literature.