文档介绍：NEW YORK UNIVERSITY
FINECII
Franklin Allen and Douglas Gale
January 31, 2003
Capital Structure
The Modigliani and Miller capital structure and payout policy theorems were the
result of the practical questions “How should a firm choose its capital structure”. The
theory that we covered last time clarified the nature of the Modigliani and Miller result.
This had taken some time to do. Along the way people expended a large amount of effort
trying to understand what was going on. For example, the Stiglitz and Hellwig papers are
interesting because they show how difficult people found it to understand the nature of
the result. In terms of what we end up with the fact that capital structure can matter with
plete markets is not a particularly useful result in answering the basic question.
Nobody has really pursued this at any length as a way of explaining what we observe
with regard to firm’s capital structures.
At this stage you should read the following paper (available from ).
Rajan, R. and L. Zingales (1995). “What do we know about Capital Structure? Evidence
from International Data,” Journal of Finance 50, 1421-1460.
As the title suggests this outlines differences in capital structure across countries.
It shows that institutional factors such as taxes and bankruptcy codes may well be
important.
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Payout Policy
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