The Pecking-Order Theory of Capital Structure States That Firms Prefer

question 83

True/False

The pecking-order theory of capital structure states that firms prefer internal financing to avoid sending out adverse signals that may lower the stock price.

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Definitions:

Donor

An individual or organization that gives something voluntarily, often a sum of money or a blood donation, without expecting anything in return.

Gift

A transfer of property or funds from one person to another without any expectation or requirement of payment or compensation.

Intangible

Assets or properties that do not have physical substance, such as patents, copyrights, or brand reputation.

Material Facts

Important facts that could influence a decision maker’s conclusion or outcome in a legal, financial, or commercial context.