The DOI matches its Crossref record; 4 of the 4 references it cites were found in a registry or an index.
Capital Structure and Signaling Game Equilibria
Abstract
In this article we model the financing decisions of a firm as a sequential signaling game. We prove that, when insiders have perfect information regarding the firm's future cash flows, the application of “refinements” to the set of admissible equilibria leads to the dominance of debt over equity financing. However, we show that when insiders observe the firm's cash flows imperfectly, there may exist sequential equilibria in which this “pecking order” breaks down and some firms strictly prefer equity to debt financing. We also prove that, despite the breakdown of the pecking order, the announcement effect of equity financing will be negative relative to debt financing.
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Citations
Cites
The Market for "Lemons": Quality Uncertainty and the Market Mechanism
Akerlof, G. A. (1970) · The Quarterly Journal of Economics · doi:10.2307/1879431 · Cited by 23,016
Corporate financing and investment decisions when firms have information that investors do not have
Myers, S. C., & Majluf, N. S. (1984) · Journal of Financial Economics · doi:10.1016/0304-405x(84)90023-0 · Cited by 18,957
The Determination of Financial Structure: The Incentive‐Signalling Approach,
Ross, S. A. (1977) · The Bell Journal of Economics · doi:10.2307/3003485 · Cited by 4,168
Valuation effects of security offerings and the issuance process
Mikkelson, W. H., & Partch, M. M. (1986) · Journal of Financial Economics · doi:10.1016/0304-405x(86)90049-8 · Cited by 1,213
Cited by
Capital structure decisions: Which factors are reliably important?
Frank, M. Z., & Goyal, V. K. (2009) · Financial Management · doi:10.1111/j.1755-053x.2009.01026.x · Cited by 2,859
Trade-Off and Pecking Order Theories of Debt
Frank, M. Z., & Goyal, V. K. (2007) · SSRN Electronic Journal · doi:10.2139/ssrn.670543 · Cited by 455
The Stock Market and the Financing of Corporate Growth in Africa: The Case of Ghana
Yartey, C. A. (2006) · IMF Working Papers · doi:10.2139/ssrn.934460 · Cited by 31
Metadata
- Authors
- Noe, T. H.
- Venue
- Review of Financial Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 1988-10
- Volume
- 1
- Issue
- 4
- Pages
- 331-355
- ISSN
- 0893-9454 (ISSN-L)
- 1465-7368
- OpenAlex
- W2090681977
- Cited by
- 203
- References
- 4
- FWCI
- 8.35
- Type
- journal article
- Language
- en
- Open access
- closed
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- Noe, T. H. (1988). Capital Structure and Signaling Game Equilibria. Review of Financial Studies. https://doi.org/10.1093/rfs/1.4.331
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
