Specification analysis of corporate equity financing decision: a conditional residual approach

Abstract

Private placement, Public offering, Residual analysis, G39, G32, K22,

The timing of new corporate debt issues and the risk-return tradeoff

“…Signalling theory is concerned with decreasing the degree of information asymmetry between two parties involved in a transaction (Spence, 2002) and its use to explain corporate events is gaining momentum in areas such as corporate management, human resource management and entrepreneurship, as well as into the fields of finance, organizational science and accounting (Connelly et al, 2011). It is evident that inside managers know more about the firm and its future prospects than do outside investors (Anderson and Prezas, 2003;Chen et al, 2004;Wu and Lee, 2008;Shaw, 2012;Gangopadhyay et al, 2014;Koutmos, 2016;Milian, 2016). In the words of Stiglitz (2002, p.469), information asymmetries result when "different people know different things."…”