The asymmetric information explanation of capital structure suggests that firms will issue new equity only when the managers believe the firm's stock is overvalued; as a result, issuing new equity is considered a negative signal that will result in a
decline in share price.
Indicate whether the statement is true or false
TRUE
Business
You might also like to view...
Which of the following statements is true if total fixed costs decrease while the sales price per unit and variable cost per unit remain constant?
A) The contribution margin increases. B) The breakeven point increases. C) The contribution margin decreases. D) The breakeven point decreases.
Business
According to the VALS segmentation framework, consumers primarily motivated by ideals are guided by ________
A) knowledge B) social activity C) products that demonstrate success to their peers D) variety E) risk
Business