5. Be mindful that investors are aware that you have an incentive to issue securities that you...
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5. Be mindful that investors are aware that you have an incentive to issue securities that you know are overpriced. Thus, when an issue is announced, investors will lower their valuation of that security. This effect is most pronounced for equity issues because the value of equity is most sensitive to the manager’s private information.
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Fundamentals Of Corporate Finance
ISBN: 9781292018409
3rd Global Edition
Authors: Berk, Peter DeMarzo, Jarrad Harford
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