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Multi-stage investment, long-term asymmetric information and equity issues

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  • Miglo, Anton

Abstract

We analyze equity financing for a two-stage investment and consider different informational structures. When private information is short-term, equilibria are consistent with signalling theory and pecking-order theory. When private information is long-term, equilibria may exist where high quality firms issue equity. The model explains the link between debt-equity choice and subsequent performance after issue (short-term versus long-term). A set of new predictions is generated regarding the link between the extent of asymmetric information and equity issues, macroeconomic performance and equity issues and market timing.

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  • Miglo, Anton, 2012. "Multi-stage investment, long-term asymmetric information and equity issues," MPRA Paper 46692, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46692
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    Cited by:

    1. Miglo, Anton, 2010. "The Pecking Order, Trade-off, Signaling, and Market-Timing Theories of Capital Structure: a Review," MPRA Paper 46691, University Library of Munich, Germany, revised 2013.
    2. Anton Miglo, 2009. "Earnings‐Based Compensation Contracts Under Asymmetric Information," Manchester School, University of Manchester, vol. 77(2), pages 225-243, March.
    3. Miglo, Anton, 2021. "A New Capital Structure Theory: The Four-Factor Model," MPRA Paper 105102, University Library of Munich, Germany.
    4. Miglo, Anton, 2017. "Timing of earnings and capital structure," The North American Journal of Economics and Finance, Elsevier, vol. 40(C), pages 1-15.
    5. Miglo, Anton, 2020. "ICO vs. Equity Financing Under Imperfect, Complex and Asymmetric Information," MPRA Paper 99598, University Library of Munich, Germany.

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    More about this item

    Keywords

    equity issues; long-term asymmetric information; multi-stage investment; pecking-order theory; signalling;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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