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In finance, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or 'structure' of its liabilities. For example, a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equity financed and 80% debt financed. The firm's ratio of debt to total financing, 80% in this example, is referred to as the firm's leverage.
In the capital structure decision. The theorem states that, in a perfect market, the value of a firm is unaffected by how that firm is financed. This result provides the base with which to examine real world reasons why capital structure is relevant, that is, a company's value is affected by the capital structure it employs. These other reasons include bankruptcy costs, agency costs and asymmetric information. This analysis can then be extended to look at whether there is in fact an 'optimal' capital structure: the one which maximizes the value of the firm.
Capital Structure as a Strategic Variable
(Editor?s Note: This post comes to us from David Matsa of the Kellogg School of Management, Northwestern University.)
The standard corporate finance paradigm posits that a firm determines its optimal capital structure by making tradeoffs between the tax advantages of debt, the expected costs of financial distress, the impact of asymmetric information, and the implications for [...
Pensions and Corporate Capital Structure Decisions
(Editor?s Note: This post comes to us from Anil Shivdasani of the University of North Carolina at Chapel Hill and Irina Stefanescu of Indiana University...
CAPITAL STRUCTURE OF THE ARUBA COMPANY WITH LIMITED LIABILITY
Full value share is required
On January 1, 2009 the new Aruba Ordinance on the company with limited liability (vennootschap met beperkte aansprakelijkheid; VBA) became effective...
Committee on Capital Markets: How to Reorganize the U.S. Financial Regulatory Structure
The Committee on Capital Markets Regulation has released its "Recommendations for Reorganizing the U.S. Financial Regulatory Structure...
DOD OIG Audits: Navy Working Capital Fund, Capital Asset Management System, Army Working Capital Fund
D-2008-092 Controls Over the Department of the Navy Working Capital Fund Inventory Stored at Non-Defense Logistics Agency Organizations, May 13,...
From Human Capital to Capital Gains: The Puzzle of Profits Interests
Sarah Pendergraft (McKee Nelson, Washington, D.C.; J.D. 2007, Virginia) has published From Human Capital to Capital Gains: The Puzzle of Profits Interests, 27 Va...
what are the proper and legal steps to dissolve a partnership in an ongoing farm business?
I would say that the final tax forms are dispersed for that year with the indica...

what are the proper and legal steps to dissolve a partnership in an ongoing farm business?
I would say that the final tax forms are dispersed for that year with the indica...















