Luo, Guo Ying; Brick, Ivan; Frierman, Michael - In: Review of Quantitative Finance and Accounting 19 (2002) 2, pp. 215-37
This paper develops a simple signaling model whereby high valuation firm uses levels of investment, debt and dividends to convey information to the market regarding its valuation. Conditions are determined under which investment, debt and dividends are employed in a separating Nash equilibrium....
