THEORETICAL APPROACHES ON OPTIMAL CAPITAL STRUCTURE

Abstract

F. Modigliani and M. Miller demonstrated in 1958 that in the context of perfect market the financial structure of the firm does not influence its value. Since then, many researchers have approached the issue of financial structure in less restrictive hypotheses. Without reaching a consensus, they have tried to prove that the optimal capital structure exists. The goal of this article is to synthesize the literature on the financial structure and to relate the theories to known empirical evidence. The main models of the optimal financial structure belong to the agency theory, the signalling theory, the transaction cost economics and the pecking order theory. Financing decision varies according to a number of factors that may influence capital structure differently: firm profitability, dividend policy, growth opportunities, asset specificity, corporate tax shield, company size and some macroeconomic factors such as inflation rate and capital market condition.

Authors and Affiliations

Maria Zenovia GRIGORE, Mariana GURĂU

Keywords

Related Articles

PARTICULARITIES OF CIVIL ACTION IN THE CASE OF FRAUD BY BANK CREDIT CONTRACTS

The crime of fraud is one of the most important threats facing the contemporary Romanian society. One of the most common ways of fraud is fraud through credit agreements. Of course, as in any criminal proceedings, in thi...

THE CONTRIBUTION OF THE ROMANIAN CONSTITUTIONAL COURT TO ESTABLISH THE RELATION BETWEEN THE RIGHT TO PROPERTY AND THE RIGHT TO A HEALTHY ENVIRONMENT

The present study aims to establish the relation between the right to property and the right to a healthy environment from the perspective of the jurisprudence of the Romanian Constitutional Court. The relation between t...

THE LEGAL REGIME OF THE MORTGAGE OVER THE SHARES AND SOCIAL PARTS IN THE CURRENT BUSINESS ENVIRONMENT

The present study aims to scrutinize the main legal traits of the mortgage over the shares (from a joint-stock company) and social parts (from a limited liability company) with focus on the modalities of establishment, t...

A RESEARCH ON POLICIES FOR GREEN ECONOMY IN DEVELOPED AND DEVELOPİNG COUNTRİES WİTHİN THE SCOPE OF SUSTAINABLE DEVELOPMENT

With the increasing population since the existence of mankind technology has developed the use of resources which increased with development of technology and production and environmental destruction has been the result...

CONTEMPORARY ISSUES RELATED TO ILLICIT DRUG TRAFFICKING AND CONSUMPTION TARGETING THE NATIONAL SECURITY OF ROMANIA

A serious social problem is drug use, which is very widespread all over the world. Drugs are a terrible problem whose seriousness becomes more visible every day. Problems caused by drug abuse and illegal trafficking are...

Download PDF file
  • EP ID EP591027
  • DOI -
  • Views 159
  • Downloads 0

How To Cite

Maria Zenovia GRIGORE, Mariana GURĂU (2019). THEORETICAL APPROACHES ON OPTIMAL CAPITAL STRUCTURE. Challenges of the knowledge society ( Provocari ale societatii cunoasterii ), 11(13), 1035-1040. https://europub.co.uk/articles/-A-591027