According to the Signaling Theory of Capital Structure, the Issuance

question 30

True/False

According to the signaling theory of capital structure, the issuance of equity for a firm with various financing alternatives signals that the firm has very favorable prospects which it wants to share with new shareholders.

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Definitions:

Reasoning

The mental process of generating conclusions, judgments, or inferences from facts or premises.

Values

Fundamental beliefs or principles that guide behavior and decision-making.

Beliefs

Mental attitudes or positions held by individuals that something is true or exists, even without empirical evidence.

Intentions

Plans or objectives that a person intends to accomplish or bring about.