Theory Of Capital Structure A Review
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Theory Of Capital Structure A Review
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Author : Stein Frydenberg
language : en
Publisher:
Release Date : 2011
Theory Of Capital Structure A Review written by Stein Frydenberg and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
This paper is a review of the central theoretical literature. The most important arguments for what could determine capital structure is the pecking order theory and the static trade off theory. These two theories are reviewed, but neither of them provides a complete description of the situation and why some firms prefer equity and others debt under different circumstances. The paper is ended by a summary where the option price paradigm is proposed as a comprehensible model that can augment most partial arguments. The capital structure and corporate finance literature is filled with different models, but few, if any give a complete picture.
A Critical Literature Review Of Capital Structure Theories
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Author : Mr. Douglas Wafula Simiyu
language : en
Publisher:
Release Date : 2020
A Critical Literature Review Of Capital Structure Theories written by Mr. Douglas Wafula Simiyu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
Capital structure is a vital component of any business entity. The success and or failure of many business enterprises arise from their capital structures. Many financial institutions adopt different approaches regarding their capital structure arrangement. Some depend entirely on debt financing, others depend more on equity financing and others still mix the two approaches. The question has been which capital structure is the best for financial institutions? For those firms which prefer mixing the two approaches, what would be the best portion for the two approaches? This paper critically reviews the capital structure theories, which include Franco Modigliani and Merton Miller theorem, Trade-off theory of capital structure and taxes, Pecking order theory, The market timing theory and Agency cost theory. This paper suggests that any financial institution should carefully analyze its operations before making its capital structure decision.
Empirical Capital Structure
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Author : Christopher Parsons
language : en
Publisher: Now Publishers Inc
Release Date : 2009
Empirical Capital Structure written by Christopher Parsons and has been published by Now Publishers Inc this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Business & Economics categories.
Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
Capital Structure Theory
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Author : Dilrukshi Yapa Abeywardhana
language : en
Publisher:
Release Date : 2017
Capital Structure Theory written by Dilrukshi Yapa Abeywardhana and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
Capital structure is still a puzzle among finance scholars. Purpose of this study is to review various capital structure theories that have been proposed in the finance literature to provide clarification for the firms' capital structure decision. Starting from the capital structure irrelevance theory of Modigliani and Miller (1958) this review examine the several theories that have been put forward to explain the capital structure. Three major theories emerged over the years following the assumption of the perfect capital market of capital structure irrelevance model. Trade off theory assumes that firms have one optimal debt ratio and firm trade off the benefit and cost of debt and equity financing. Pecking order theory (Myers, 1984, Myers and Majluf, 1984) assumes that firms follow a financing hierarchy whereby minimize the problem of information asymmetry. But neither of these two theories provide a complete description why some firms prefer debt and others prefer equity finance under different circumstances. Another theory of capital structure has introduced recently by, Baker and Wurgler (2002), market timing theory, which explains the current capital structure as the cumulative outcome of past attempts to time the equity market. Market timing issuing behaviour has been well established empirically by others already, but Baker and Wurgler (2002) show that the influence of market timing on capital structure is regular and continuous. So the predictions of these theories sometimes acted in a contradictory manner and Myers (1984) 32 years old question “How do firms choose their capital structure?” still remains.
Innovation Internationalization And Entrepreneurship
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Author : Renata Korsakienė
language : en
Publisher: MDPI
Release Date : 2021-08-17
Innovation Internationalization And Entrepreneurship written by Renata Korsakienė and has been published by MDPI this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-08-17 with Business & Economics categories.
Over the past years, businesses have had to tackle the issues caused by numerous forces from political, technological and societal environment. The changes in the global market and increasing uncertainty require us to focus on disruptive innovations and to investigate this phenomenon from different perspectives. The benefits of innovations are related to lower costs, improved efficiency, reduced risk, and better response to the customers’ needs due to new products, services or processes. On the other hand, new business models expose various risks, such as cyber risks, operational risks, regulatory risks, and others. Therefore, we believe that the entrepreneurial behavior and global mindset of decision-makers significantly contribute to the development of innovations, which benefit by closing the prevailing gap between developed and developing countries. Thus, this Special Issue contributes to closing the research gap in the literature by providing a platform for a scientific debate on innovation, internationalization and entrepreneurship, which would facilitate improving the resilience of businesses to future disruptions.
A Comprehensive Review On Capital Structure Theories
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Author : Hamed Ahmadinia
language : en
Publisher:
Release Date : 2018
A Comprehensive Review On Capital Structure Theories written by Hamed Ahmadinia and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The aim of this article is to provide a comprehensive review on different theories and hypothesis in regard with achieving an optimal capital structure. Many researchers believed that capital structure includes share issuance, private investment, bank debt, business debts, leasing contracts, tax debt, retirement debt, deferred compensation for executives and employees, deposits, product related-debt and other probable debt. These theories and hypothesis include: Net income, Net operational income, Traditional approach theory, Miller and Modigliani theory, Static trade-off theory, Asymmetric of the information hypothesis, Pecking order theory, Signaling theory, Agency cost theory, Free cash flow hypothesis, Dynamic trade-off theory and Market Timing theory. By applying these theories, the analysts will be able to reach a maximum return with minimum risk while they increase the value of corporation. Because of the close relationship between profitability and capital structure, this paper is going to suggest a new model called genetic algorithm model by using support vector regression and profitability factors for obtaining an international range of optimal capital structure.
Review Of Capital Structure Theories
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Author : Konstantinos Seferiadis
language : en
Publisher:
Release Date : 2016
Review Of Capital Structure Theories written by Konstantinos Seferiadis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
The "average" firm in the market of United Kingdom has changed its leverage ratio dramatically in the last three decades, following some patterns which apparently cannot be explained by applying simplistic methods. In this paper we try to shed some light in the main stream of the Capital Structure Theories and its critical determinants that influence the evolution in the period of our study. Using the equity decisions of an initial dataset of 3489 firms in UK, we try to reply in three main issues. First, using descriptive statistics, we try to consider how corporate capital structures have evolved during the last three decades in UK. Then, we investigate if existing empirical models explain the changes in the issuing of debt and equity. And last, if these models cannot explain the changes, we examine the nature of forces that are behind variation in financial policy. In our analysis, with a view to find the determinant forces behind, we examine a wide set of linear regressions, concluding to a model comprising of the most prominent factors that affect capital structure changes. Our regression framework is an improvement that can implement the foundation for much future work.
Capital Structure And Corporate Financing Decisions
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Author : H. Kent Baker
language : en
Publisher: John Wiley & Sons
Release Date : 2011-03-31
Capital Structure And Corporate Financing Decisions written by H. Kent Baker and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-03-31 with Business & Economics categories.
A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environment Given the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth. Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firms This valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.
Capital Structure In The Modern World
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Author : Anton Miglo
language : en
Publisher: Springer
Release Date : 2016-07-20
Capital Structure In The Modern World written by Anton Miglo and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-07-20 with Business & Economics categories.
This book focuses on microeconomic foundations of capital structure theory. It combines theoretical results with a large number of examples, exercises and applications. The book examines fundamental ideas in capital structure management, some of which are still not very well understood in the business community, such as Modigliani and Miller’s irrelevance result, trade-off theory, pecking-order theory, asset substitution, credit rationing and debt overhang. Chapters also cover capital structure issues that have become very important following the recent financial crisis. Miglo discusses the ways in which financial economists were forced to look critically at capital structure, as the problems faced by many companies stemmed from their financing policies following the crisis. The book also discusses links between capital structure and firm’s performance, corporate governance, firm’s strategy and flexibility, and covers such topics as life cycle approach to capital structure management, capital structure of small and start-up companies, corporate financing versus project financing and examples of optimal capital structure analyses for different companies. This comprehensive guide to capital structure theory will be of interest to all students, academics and practitioners seeking to understand this fast-developing and critical area of business management.
Capital Structure Decision
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Author : William E. Fruhan
language : en
Publisher:
Release Date : 1971
Capital Structure Decision written by William E. Fruhan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1971 with categories.