Language:

Capital Structure and the Theory  of Perfect Capital Markets

Corporate Finance, 2017, p.589-600

Full text available

Citations Cited by

Title:
Capital Structure and the Theory  of Perfect Capital Markets
Author: Dallochio, Maurizio ; Le Fur, Yann ; Quiry, Pascal ; Vernimmen, Pierre ; Salvi, Antonio
Subjects: capital structure ; debt policy ; equity value ; financial leverage ; weighted average cost
Is Part Of: Corporate Finance, 2017, p.589-600
Description: In conventional wisdom, there is an optimal capital structure that maximises enterprise value by the judicious use of debt and the leverage it offers. This enables the company to minimise its weighted average cost of capital ‐ that is, the cost of financing. At this level of financial leverage the company has achieved the optimal capital structure, ensuring the lowest weighted average cost of capital and thus the highest enterprise value. The evidence from the "real world" shows that an optimal capital structure can be achieved with some ‐ but not too much ‐ leverage. According to the traditional approach, an optimal capital structure can be achieved where the weighted average cost of capital is minimal. If there is no optimal capital structure, then the overall cost of equity remains the same regardless of the firm's debt policy.
Publisher: Chichester, UK: John Wiley & Sons, Ltd
Language: English
Identifier: ISBN: 9781119424482
ISBN: 1119424488
EISBN: 9781119424444
EISBN: 1119424445
DOI: 10.1002/9781119424444.ch32
Source: Ebook Central Academic Complete

Back to results list


INSPIRE LIBRARY - TON DUC THANG UNIVERSITY	(84-028) 37 755 057	Feedback
19 Nguyen Huu Tho St. Dist.7, HCM	thuvien@tdtu.edu.vn	Feedback

Searching Remote Databases, Please Wait