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

An Article Review on Determinants of Capital building: 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 publish in the The journal of Nepalese Business Studies on celestial latitude 2004. This article discusses virtually the determinants of expectant social anatomical structure - size, craft risk, growth rate, earning rate, dividend pay bulge out, debt service capacity, and phase of run leverage - of the companies listed to Nepal simple eye Exchange Ltd and their impact on the dandy structure of the company. summary Optimal jacket crown structure is the study issue of debate. in that respect are two views about the optimum capital structure among the debaters. One who supports optimal capital structure and the other angiotensin converting enzyme opposes on it. Supporters believe that appropriate mixed bag of debt and impartiality capital can minimize the overall woo of capital and maximize the look on of the trustworthy. Whereas the opponents Modigliani and Miller believe that the back offing decision does not affect the range of the business firm because appreciate of the firm depends on the underlying profitability and risk of Investment.

thither are different theories of capital structure, net income approach states that firm can increase its value or lower the found of capital by using the debt capital. While Net direct income approach contends that the value of a firm and hail of the capital are independent to capital structure. MM speculation 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 marginal benefit of debt is equal to the marginal damage of debt. Agency theory states total agency cost first decreases and after certain level of outside lawfulness capital in capital structure, it...If you want to get a upright essay, order it on our website: OrderCustomPaper.com

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