Signaling theory

Signaling theory

Signaling Theory

Signaling theory is founded on the assumption that data is not identically accessible to all parties at the identical time, and that data asymmetry is the rule. Information asymmetries (see furthermore asymmetry - issuer/investor) can outcome in very reduced valuations or a sub-optimum buying into policy. Signaling theory states that business economic conclusions are pointers dispatched by the company's managers to investors in alignment to agitate up these asymmetries. These pointers are the foundation of economic communications policy.

Signaling Theory of Capital Structure- An Improvement on Tradeoff Theory: This is another modification of the theory of Miller ...