Modern Theory of Capital Cost and Capital Structure: Brusov–Filatova–Orekhova Theory (BFO Theory)

Peter Brusov, Tatiana Filatova and Natali Orekhova
Additional contact information
Tatiana Filatova: Financial University under the Government of Russian Federation
Natali Orekhova: Financial University under the Government of Russian Federation

Chapter Chapter 4 in The Brusov–Filatova–Orekhova Theory of Capital Structure, 2023, pp 73-88 from Springer

Abstract: Abstract One of the serious limitations of the Modigliani–Miller theory is the suggestion about perpetuity of the companies. In 2008, Brusov–Filatova–Orekhova (Filatova et al. Bull FU 48:68–77, 2008) have lifted up this limitation and shown, that the accounting of the finite lifetime (finite age) of the company leads to significant changes in all Modigliani–Miller results (Мodigliani and Мiller, Am Econ Rev 48:261–297, 1958; Am Econ Rev 53:147–175, 1963; Am Econ Rev 56:333–391, 1966): capitalization of the company is changed, as well as the equity cost, ke, and the weighted average cost of capital, WACC, in the presence of corporative taxes. Besides a number of qualitatively new effects in corporate finance, obtained in Brusov–Filatova–Orekhova theory (Brusov et al. Appl Financ Econ 21:815–824, 2011a; Res J Econ Bus ICT 2:16–21, 2011b; Res J Econ Bus ICT (UK) 2:11–15, 2011c; Res J Econ Bus ICT 2: 16–21, 2011d; Appl Financ Econ 22:1043–1052, 2012a; J Rev Glob Econ 1:106–111, 2012b; J Rev Glob Econ 2:94–116, 2013a; J Rev Glob Econ 2:183–193, 2013b; Cogent Econ Financ 2:1–13, 2014a; J Rev Glob Econ 3:175–185, 2014b; Brusov and Filatova, Financ Credit 435:2–8, 2011), is absent in Modigliani–Miller theory.

Keywords: Brusov–Filatova–Orekhova (BFO) theory; The Modigliani–Miller theory; The weighted average cost of capital; Company capitalization; A qualitatively new anomalous effect (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-27929-4_4

Ordering information: This item can be ordered from
http://www.springer.com/9783031279294

DOI: 10.1007/978-3-031-27929-4_4

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().