Problem
The CFO is proposing that her company issues equity to reduce leverage because the company's current leverage ratio is 40% and the CFO believes that lower leverage will increase company value. But a board member who is a CFO of another company noted that despite having a high leverage ratio, the company is mature and highly profitable, and has an investment-grade credit rating (rating of A-). This board member is arguing that the company does not need to issue equity to reduce debt. Who is right, the CFO or the board member? Discuss.