... the costs associated with bankruptcy"3 2 Summary of Articles 2.1 Timing, investment opportunities, managerial discretion and the security issue decision The focus of the authors with this paper is on why, when, and how firms issue securities to raise capital for investments. The authors analyze the ability of the pecking-order model, agency, and the timing models to explain a firm's financing decision. The paper evaluates the market reaction to financing decisions, and the actions of the firm following an issue. Results indicate strong support for the agency model and find that two types of firms issue equity. The first, firms with valuable investment opportunities seeking to finance growth and profitability additionally firms without valuable investment opportunities that have debt capacity. The paper reports that firms without valuable investment opportunities have a greater negative stock price reaction than firms with better investment opportunities. The authors find that the firms with the most valuable investment ...

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