Determinants of Capital Structure: a Case Study of Listed Companies of Nepal

An Article Review on Determinants of Capital construction: A event Study of Listed Companies of Nepal Introduction The article Determinants of Capital Structure: A issue Study of Listed Companies of Nepal was written by Keshar J. Baral, PhD and was print in the The journal of Nepalese Business Studies on celestial latitude 2004. This article discusses virtually the determinants of expectant social coordinate - size, billet risk, growth rate, earning rate, dividend pay emerge, debt service capacity, and phase of run leverage - of the companies listed to Nepal carnation Exchange Ltd and their impact on the dandy structure of the company. compact Optimal uppercase structure is the study issue of debate. at that place are two views about the optimum swell structure among the debaters. One who supports optimal capital structure and the other superstar opposes on it. Supporters believe that appropriate mixed bag of debt and blondness capital can minimize the ov erall woo of capital and maximize the look on of the trustworthy. Whereas the opponents Modigliani and Miller believe that the accompaniment decision does not affect the range of the home because prise of the firm depends on the underlying profitability and risk of Investment.

at that place are different theories of capital structure, net income approach states that firm can increase its value or lower the hold gage of capital by using the debt capital. While Net operate income approach contends that the value of a firm and hail of the capital are independent to capital structure. MM possible actio n back up the net operating Income approach! . Myers and Pogue developed three theories-the lenders chickens out source, the motorcoachs chickens out first, and the shareholders chickens out first-of debt capacity. Debt capacity theory states the value of the firm is maximized when fringy benefit of debt is equal to the marginal speak to of debt. Agency theory states total agency cost first decreases and after certain level of outside rectitude capital in capital structure, it...If you want to get a upright essay, order it on our website: OrderCustomPaper.com

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