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Capital Structure and Gearing

C/F/95. Capital structure and companys value

WORDS:
2100
DATE:
2005
PRICE:
29.99 GBP

This paper is dedicated to the analysis of influence of optimal capital structure on value of a company. The set up of the problem implies introducing the new product line which can substantially change cash flows to the company. The question is bound to arise: how to finance the new investment project. The author scrutinizes the problem from different aspects and shows that in real life there can be found capital structure which maximizes the value of a company. The particular attention is devoted to various determinants of capital structure like size, growth, structure of assets, volatility and profitability. The author ends up the paper with scrutiny of executive stock options as an instrument to alleviate the agency problem. Overall this paper would be useful for those writing on capital structure choice and agency problems.

 

KEYWORDS: f, capital, structure, companys, value,