Capital Structure Decision - Theoretical Underpinnings and Empirical Evidences
Published: 2014
Author(s) Name: Inderjit Kaur |
Author(s) Affiliation: Research Fellow, Finance Department, National Institute of Financial Management, Faridabad, India
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Abstract
The objective of the paper is to survey the theories on the capital structure with objective to ascertain whether the capital
structure decision is relevant for a firm. The theoretical underpinnings have been surveyed from the theory of irrelevance by Modigliani
and Miller to recent theories like Pecking order and Market Timing theory of capital structure. The theoretical underpinnings have been
substantiated with empirical evidences from developed and developing economies.
Keywords: Capital Structure, Value of Firm, Theory of Irrelevance, Pecking Order
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