Does the signaling hypothesis suggest that the firm should issue new stock to finance its capital expenditures

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Does the signaling hypothesis suggest that the firm should issue new stock to finance its capital expenditures since this action sends a positive signal to investors that the firm is growing?

I thought investors viewed new stock sales as a negative signal, so I'm confused by this. Please explain if this is a correct understanding of what the signaling hypothesis is. Thank you.

Posted Date: May 19, 2024 07:09 AM

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Does the signaling hypothesis suggest that the firm should issue new stock to finance its capital expenditures

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