Reassess of capital structure theories

Rajib Datta, Tasnim Chowdhury and Dr Haradhan Mohajan ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study presents a review of major capital structure fiction. Capital structure decision is important for companies because it helps to increase firm value by ensuring that the company has enough resources to carry out planned investments using as much as possible the cheapest cost of capital. It therefore involves choices between the different sources of capital such as debt, equity and hybrid capital. The different sources of finance available to companies are also influenced by the quality and maturity of the financial system and the overall risk of operating in that environment. The paper identified a host of capital structure theories that are key contemplation in the financing structure of firms around the world. This review will help companies in emerging and underdeveloped economies identify the peculiarities in the choosing the appropriate blend of capital.

Keywords: Capital structure; Cash flows; Financial risk; Principles; Theories. (search for similar items in EconPapers)
JEL-codes: G15 (search for similar items in EconPapers)
Date: 2013-06-15, Revised 2013-07-10
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (3)

Published in International Journal Of Research In Computer Application & Management 10.3(2013): pp. 102-106

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:51165

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