According to the Signaling Theory of Capital Structure,firms First Use

question 29

True/False

According to the signaling theory of capital structure,firms first use common equity for their capital,then use debt if and only if they can raise no more equity on "reasonable" terms.This occurs because the use of debt financing signals to investors that the firm's managers think that the future does not look good.

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Definitions:

Rule-Of-Reason Analysis

A legal doctrine used in antitrust law to determine if a restrictive practice is harmful or beneficial to market competition.

Judge Consider

The process by which a judge examines the facts and law related to a case before making a decision or ruling.

Price Fixing

An illegal agreement among competitors to fix, control, or maintain the price of goods or services at a certain level, often leading to antitrust violations.

Antitrust Action

A legal step initiated to prevent or reduce anti-competitive practices, promoting fair competition in the market.