According to the signaling theory, which of the following actions by the management is taken as a signal that the firm's prospects are not bright? Assume that the firm has multiple financing alternatives.
A. A small company raising any required new capital by issue of new shares
B. A mature company raising any required new capital by issue of new shares
C. A small company maintaining a reserve borrowing capacity
D. A mature company maintaining a reserve borrowing capacity
E. A mature company raising any required new capital using debt beyond the normal target capital structure
Answer: B
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