Is there an optimal capital structure for firms? How do the various theories on capital structure allow us to arrive at an answer to this question?
** Please remember to critically discuss the issues you raise and provides example for the points that you make through referring to practical examples and empirical studies on the topic.
Include referencing from,
Modigliani, F.; Miller, M. (1963). “Corporate income taxes and the cost of capital: a correction”. American Economic Review 53 (3): 433–443.
Modigliani, F. and Miller, M. ‘The cost of capital corporation finance and the theory of investment’, American Economic Review June 1958
Myers, SC. (1984) ‘The capital Structure puzzle’, The Journal of Finance, Vol 39, Issue No. 3
Sheridan Titman and Roberto Wessels, The determinants of capital structure choice, Journal of Finance 43 (March 1988), 1-40
R. Rajan and L. Zingales, What do we know about capital structure? Some evidence from international data, Journal of Finance 50 (1995), 1421-1460
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