What can a firm’s capital structure choice say about its quality? Do “good” firms issue shares rather than bonds or vice versa? If there is no strict rule then are there any average correlations between capital structure choice and a firm’s quality? These questions are discussed in Chapter 7. Some recent examples of stocks and bonds issues are presented. New approaches are discussed including the role of long-term asymmetric information between firms’ insiders and outsiders. The connections between firms’ capital structure choices and their performances are analyzed. A particular focus is on the difference between firms’ short-term and long-term operating performances. The chapter then discusses the market timing idea of capital structure. It explains why firms usually issue shares when their prices are high and when the economy is growing.