Question: 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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