According to the Signaling Theory to Explain Differences in Firms

question 44

True/False

According to the signaling theory to explain differences in firms' capital structures, an announcement of a new stock issue by a mature, seasoned firm that has numerous financing alternatives generally is seen as a signal that the its future prospects are very positive. 

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Definitions:

Statutory Income Tax Rate

The prescribed rate by law that a company or individual pays on income, differing by country and sometimes by income level or source.

Tax Jurisdiction

The legal authority granted to a government entity to impose taxes on individuals, businesses, or transactions within a defined geographical area.

Permanent Differences

These are differences between taxable income and accounting income that originate in one period and do not reverse subsequently.

Deferred Tax Asset

A tax relief that results from over-payment or advance payment of taxes, which can be used to reduce a company's future tax liability.