• A financing action by management that is believed to reflect its view with respect to the firm's common share value; generally, debt financing is viewed as a positive signal that management believes that the stock is undervalued, and a stock issue is viewed as a negative signal that management believes that the stock is overvalued.

• The process of conveying information through a firm's actions.

 Embedded terms in definition
 Debt financing
 Referenced Terms
 Adverse selection: A situation in which market participation is a negative Signal.

 Breakout: Is the departure from a trading range. It can be on the upside or the downside.A rise in a security's price above a resistance level (commonly its previous high price) or drop below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing move in the same direction. Can be used by technical analysts as a buy or sell indicator.A Technical Analysis term, used to indicate a rise in a stock's price above its resistance level (such as its previous high price) or drop below its support level (commonly the last lowest price.) The assumption is that the stock will continue to move in the same direction following the breakout, which generates a buy or sell Signal.

 Credible signal: A Signal that provides accurate information; a signal that can be distinguished among senders.

 Information content effect: The rise in the stock price following the dividend Signal.

 Mimic: An imitation that sends a false Signal.

 Related Terms
 Credible signal

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