Explain capital structure theory

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Explain what capital structure theory (or theories) best describes the following situations. Make sure to cite at least one of the required textbook chapters for each answer, and to cite at least two references for this section:A CEO decides to borrow $50,000 in new debt, and the share prices rise dramatically. He then decides to sell half of his own personal shares, and when this is reported in the Wall Street Journal, the share prices drop dramatically in value.

Is the answer asymmetric information or pecking order theory. An argument could be made for both. What do you think?

Reference no: EM132789547

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