Corporative Divided and Financing Peril

The articles in this chapter are devoted largely to questions of corporate capital structure. The search of optimal capital structure. it was reviewed the capital structure decision in broad terms. But even this argument has undergone major revision in the past few years. In general if capital markets are doing their job, all efforts to increase value by tinkering with capital structure are fruitless. When a firm chooses its capital structure it sells its real assets to investors as a package of financial claims. Think of the design of the package as a marketing problem. Imagine going to the supermarket with their proposition in mind. Thus the choice of capital structure when discussed with the broad brush required by this short paper, boils down to taxes, risk and asset type for example a safe consistently profitable company, with few intangible assets of growth opportunities, ought to find a relatively high debt ration attractive.