A review of capital structure theories
Gu, N. Journal of Finance, 65, Robichek, A.
When the management of the company has a high degree of ownership, the legal person shares also have a certain role in promoting the self-interest of the executives and the interests of other shareholders, while the role of the state-owned shares is not obvious.
Stiglitz's model is not a trade-off theory since he took the drastic step of assuming away uncertainty. Stiglitz, J.
Hence the objective of the company is to increase the size of the firm by investing in all sorts of projects even if these projects have a negative NPV.
Journal of Finance, 43, The higher the need to monitor the managers, the higher the agency costs will be. The annual salary is a relatively fixed income and is an assessment and recognition of the work of the senior executives during the year.
History of capital structure
The problem is that the interest of managers and shareholders is not always the same and in this case, the manager who is responsible of running the firm tend to achieve his personal goals rather than maximising returns to the shareholders. Wang, W. Zhao, Y. Gu Naikang and Yang Tao  based on the agency theory of capital structure, the research shows that the ownership structure is an important determinant of capital structure, and the change of ownership structure will also produce dynamic adjustment of capital structure. Modigliani, F. The relevant research literature is as follows. In this case, it can be said that debt financed firms are more appropriate for investors but with a high debt levels increases the cost of capital as well as bankruptcy costs. Journal of Finance, 43, Brockman, P. Financial Management, Winter, pp. Thus tax rate and leverage have positive relationship. The pecking order theory regards the market-to-book ratio as a measure of investment opportunities. Literature Review on the Theory of Capital Structure Modigliani and Miller  conducted a groundbreaking study on the theory of capital structure, and proposed that the theory that the capital structure of the company has nothing to do with the company value in the complete market is the MM theory.
based on 52 review