Which of the following two statements is correct?

S1: Signaling theory stipulates that, because information is symmetric, capital structure is irrelevant, i.e., managers cannot affect the firms value by changing the firms capital structure.

S2: Pecking order hypothesis states that capital structure is a result of managers timing capital markets. Thus, firms capital structures are a result of how favorable conditions were in bond and stock markets during times when the firm had to raise capital.

Group of answer choices

Both statements are correct

S1 is correct but S2 is false

S2 is correct but S1 is false

Both statements are false