According to pecking-order theory, managers will often choose to finance with:

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Pecking-order theory suggests that managers prefer to finance with debt rather than new equity, to avoid the negative impact on share price that can occur when issuing new shares. This is because new equity issuance can signal that the company's growth opportunities are insufficient to finance with retained earnings or debt, leading to a lower valuation. Additionally, bankruptcy costs are seen as less costly than the signaling effect of new equity issuance.

According to Pecking-Order Theory, Managers Will Often Choose to Finance