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Issuing equity can be perceived as a negative signal because at the time of equity issue: The firm is letting go of cheaper debt. The
Issuing equity can be perceived as a negative signal because at the time of equity issue:
The firm is letting go of cheaper debt. | ||
The firm is growing too fast. | ||
Mangers will use equity to pay back debt. | ||
Investors think that managers consider equity as over or maximally priced. | ||
Investors think that managers consider equity as under priced. |
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