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The top curve shows the tax shield gains of debt financing, while the bottom curve includes that minus the costs of bankruptcy. 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 ...
In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt (borrowed funds), and preferred stock, and is detailed in the company's balance sheet. The larger the debt component is in relation to the other sources of capital ...
Aswath Damodaran. Aswath Damodaran (born 24 September 1957), [1] is a Professor of Finance at the Stern School of Business at New York University (Kerschner Family Chair in Finance Education), where he teaches corporate finance and equity valuation.
v. t. e. Corporate finance is the area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase ...
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 value ...
The following outline is provided as an overview of and topical guide to corporate finance: . Corporate finance is the area of finance that deals with the sources of funding, and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources.
Stewart Myers. Stewart Clay Myers is the Robert C. Merton Professor of Financial Economics at the MIT Sloan School of Management. [1] He is notable for his work on capital structure and innovations in capital budgeting and valuation, and has had a "remarkable influence" on both the theory and practice of corporate finance. [2]
Principles of Corporate Finance is a reference work on the corporate finance theory edited by Richard Brealey, Stewart Myers, Franklin Allen, and Alex Edmans. [1][2] The book is one of the leading texts that describes the theory and practice of corporate finance. It was initially published in October 1980 and now is available in its 14th edition.