Trade-off theory of capital structure
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 who considered a balance between the dead-weight costs of bankruptcy and the tax saving benefits of debt. Often agency costs are also included in the balance. This theory is often set up as a competitor theory to the pecking order theory of capital structure. A review of the trade-off theory and its supporting evidence is provided by Ai, Frank, and Sanati.
Link from a Wikipage to another Wikipage
primaryTopic
Trade-off theory of capital structure
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 who considered a balance between the dead-weight costs of bankruptcy and the tax saving benefits of debt. Often agency costs are also included in the balance. This theory is often set up as a competitor theory to the pecking order theory of capital structure. A review of the trade-off theory and its supporting evidence is provided by Ai, Frank, and Sanati.
has abstract
The trade-off theory of capita ...... d equity to use for financing.
@en
Wikipage page ID
10,538,024
Link from a Wikipage to a Wikipage in a different language about the same or a related subject.
page length (characters) of wiki page
Wikipage revision ID
1,010,412,764
Link from a Wikipage to another Wikipage
wikiPageUsesTemplate
comment
The trade-off theory of capita ...... ided by Ai, Frank, and Sanati.
@en
label
Trade-off theory of capital structure
@en