[雙語翻譯]資本結構外文翻譯——資本結構理論綜述（原文）

1、 Electronic copy available at: https://ssrn.com/abstract=2886251 www.sciedupress.com/afr Accounting and Finance Research Vol. 6, No. 1; 2017 Published by Sciedu Press 133

2、ISSN 1927-5986 E-ISSN 1927-5994 Capital Structure Theory: An Overview D.K.Y Abeywardhana1 1 Department of Accountancy, University of Kelaniya, Sri Lanka Correspondence: D.K.Y Abeywardhana, Department of Accountancy, Un

3、iversity of Kelaniya, Sri Lanka Received: December 14, 2016 Accepted: January 27, 2017 Online Published: January 28, 2017 doi:10.5430/afr.v6n1p133 URL: http://dx.doi.org/10.5430/afr.v6n1p133 Ab

4、stract Capital structure is still a puzzle among finance scholars. Purpose of this study is to review various capital structure theories that have been proposed in the finance literature to provide clarification for the

5、 firms’ capital structure decision. Starting from the capital structure irrelevance theory of Modigliani and Miller (1958) this review examine the several theories that have been put forward to explain the capital stru

6、cture. Three major theories emerged over the years following the assumption of the perfect capital market of capital structure irrelevance model. Trade off theory assumes that firms have one optimal debt ratio and firm

7、 trade off the benefit and cost of debt and equity financing. Pecking order theory (Myers, 1984, Myers and Majluf, 1984) assumes that firms follow a financing hierarchy whereby minimize the problem of information asymm

8、etry. But neither of these two theories provide a complete description why some firms prefer debt and others prefer equity finance under different circumstances. Another theory of capital structure has introduced rece

9、ntly by, Baker and Wurgler (2002), market timing theory, which explains the current capital structure as the cumulative outcome of past attempts to time the equity market. Market timing issuing behaviour has been well

10、 established empirically by others already, but Baker and Wurgler (2002) show that the influence of market timing on capital structure is regular and continuous. So the predictions of these theories sometimes acted in

11、a contradictory manner and Myers (1984) 32 years old question “How do firms choose their capital structure?” still remains. Keywords: Capital structure, Pecking order theory, Trade off theory, Market Timing Theory 1. I

12、ntroduction The second financing choice faced by the firm, Capital Structure is still a puzzle in finance. Capital structure or financial leverage decision should be examined concerning how debt and equity mix in the fi

13、rm’s capital structure influence its market value. Debt to equity mix of the firm can have important implications for the value of the firm and cost of capital. In maximizing shareholders wealth firm use more debt capi

14、tal in the capital structure as the interest paid is a tax deductible and lowers the debt’s effective cost. Further equity holders do not have to share their profit with debt holders as the debt holders get a fixed ret

15、urn. However, the higher the debt capital, riskier the firm, hence the higher its cost of capital. Therefore it is important to identify the important elements of capital structure, precise measure of these elements an

16、d the best capital structure for a particular firm at a particular time. Researchers and practitioners explain conflicting theories on capital structure. Durand (1952) states using the Net Income (NI) approach that fir

17、m can decrease its cost capital and consequently increase the value of the firm through debt financing. In contrast, Modigliani and Miller (1958) claims in their seminal paper capital structure irrelevance that firm’s

18、value is independent of its debt to equity ratio which is known as Net Operating Income (NOI) approach. They argue that perfect capital market without taxes and transaction cost the firm value remain constant to the cha

19、nges in the capital structure. According to Pandey (2007) the traditional approach of Solaman,(1963) has emerged a compromise to the extreme position taken by the NI approach. Traditional approach does not assume const

20、ant cost of equity change in debt to equity ratio and continuously declining Weighted Average Cost of Capital (WACC). Further this approach assume the concept of optimal capital structure and thereby very clearly impli

21、es that WACC decreases only for a certain level of financial leverage and reaching the minimum level. Further increase in financial leverage would increase the WACC. www.sciedupress.com/afr Accounting and Finance Rese

22、arch Vol. 6, No. 1; 2017 Published by Sciedu Press 135 ISSN 1927-5986 E-ISSN 1927-5994 Figure 1. Source: Arnold (2008) Arnold (2008) explains how is the increase in debt

23、 capital in the capital structure effect the value of the firm in the Figure 1. As debt capital increase WACC of the firm declines until the firm reaches the optimal gearing level and cost of financial distress increas

24、es along with the debt level. This is confirmed by Miller (1988) that the optimal debt to equity ratio shows the highest possible tax shield that the company can enjoy. Further consistent with Modigliani and Miller (19

25、63), Miller (1988) confirmed the fact that firms increase the risk of bankruptcy due to the debt capital in their capital structure. In the trade off theory cost of debt are linked with direct as well as indirect cost o

26、f bankruptcy. Bradley et. al., (1984) explained that cost of bankruptcy include legal and administrative cost, other indirect cost resulting from loosing of customers and trust between staff and suppliers due to the un

27、certainties. Apart from the bankruptcy cost, agency cost of Jenson and Meckling (1976) is also considered in the trade off model. Jenson and Meckling (1976) explains that separation of ownership and control is the reaso

28、n to rise the agency cost. According to Arnold (2008) agency costs are direct and indirect costs result from principles and agents act in their best interest and, failure to make agents to act this way. Jenson (1986)

29、states that debt can reduce the agency cost and argue that higher the debt capital grater the commitment to pay out more cash. Though, Frank and Goyal (2008) contend that it is not been totally explained the impact of

30、agency conflicts on capital structure. Harris and Raviv (1990) suggest that debt capital in the capital structure produce valuable information in monitoring the agency behavior and for self-interest reasons managers are

31、 reluctant to liquidate the firm or provide such information which could lead to bankruptcy. Debt holders also concerned only on their benefit and would prefer firms to undertake safe investments nut do not bother abo

32、ut the profitability of those investments. This further explains Fama and French (2002) that due to the cost of debt agency conflicts arise between shareholders and bondholders. Brounen et. al., (2005) states that the

33、 presence of optimal capital structure or target capital structure increase the shareholder wealth. Further this study explains that even the value maximizing firm use debt capital to full capacity they face low probab

34、ility of going bankrupt. Hovakimian et. al. (2004) claims that high profitability of gearing proposes that the firms’ tax shield higher and lower the possibility of bankruptcy. This is consistent with the key predictio