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:

Exposure Therapies

Behavioral techniques that expose individuals to anxiety- or fear-related stimuli under carefully controlled conditions to promote new learning.

Computer Technology

The study and application of the design, development, implementation, support, and management of computer-based information systems.

Anxiety-Provoking

Refers to stimuli or situations that induce feelings of anxiety or nervousness.

Contingency Contract

A behavioral strategy involving a formal agreement between parties to reinforce desired behaviors or reduce undesired ones.