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  2. Trade-off theory of capital structure - Wikipedia

    en.wikipedia.org/wiki/Trade-Off_Theory_of...

    The trade-off theory of capital structure is the idea that a company chooses how much debt finance and how much equity finance to use by balancing the costs and benefits. The classical version of the hypothesis goes back to Kraus and Litzenberger [ 1 ] who considered a balance between the dead-weight costs of bankruptcy and the tax saving ...

  3. Capital structure - Wikipedia

    en.wikipedia.org/wiki/Capital_structure

    Capital structure is an important issue in setting rates charged to customers by regulated utilities in the United States. The utility company has the right to choose any capital structure it deems appropriate, but regulators determine an appropriate capital structure and cost of capital for ratemaking purposes. [3]

  4. Modigliani–Miller theorem - Wikipedia

    en.wikipedia.org/wiki/Modigliani–Miller_theorem

    The Modigliani–Miller theorem (of Franco Modigliani, Merton Miller) is an influential element of economic theory; it forms the basis for modern thinking on capital structure. [1] The basic theorem states that in the absence of taxes , bankruptcy costs, agency costs , and asymmetric information , and in an efficient market , the enterprise ...

  5. Theory of the firm - Wikipedia

    en.wikipedia.org/wiki/Theory_of_the_firm

    According to the property rights approach to the theory of the firm based on incomplete contracting, the ownership structure (i.e., integration or non-integration) determines how the returns to non-contractible investments will be divided in future negotiations. Hence, whether or not outsourcing an activity to a different firm is optimal ...

  6. Pecking order theory - Wikipedia

    en.wikipedia.org/wiki/Pecking_order_theory

    The pecking order theory may explain the inverse relationship between profitability and debt ratios; [4] and, in that dividends are a use of capital, the theory also links to the firm's dividend policy. [5] In general, internally generated cash flow may exceed required capital expenditures, and at other times will fall short. Thus when ...

  7. Capital structure substitution theory - Wikipedia

    en.wikipedia.org/wiki/Capital_structure...

    The two main capital structure theories as taught in corporate finance textbooks are the Pecking order theory and the Trade-off theory.The two theories make some contradicting predictions and for example Fama and French conclude: [3] "In sum, we identify one scar on the tradeoff model (the negative relation between leverage and profitability), one deep wound on the pecking order (the large ...

  8. Why U.K. Chancellor Rachel Reeves should approach capital ...

    www.aol.com/finance/why-u-k-chancellor-rachel...

    In September, U.K. capital gains tax (CGT) receipts hit their highest monthly level since 2008. As the country awaits the imminent Autumn Budget, business owners and investors are sounding the ...

  9. Capitalist mode of production (Marxist theory) - Wikipedia

    en.wikipedia.org/wiki/Capitalist_mode_of...

    Out of preceding characteristics of the capitalist mode of production, the basic class structure of this mode of production society emerges: a class of owners and managers of private capital assets in industries and on the land, a class of wage and salary earners, a permanent reserve army of labour consisting of unemployed people and various ...