Capital structure is one of the most important strategic decisions faced by firms, as it directly affects the cost of capital and the value of the firm. This lecture aims to review the Trade-Off Theory and the Agency Cost Theory, where the former explains how to achieve an optimal capital structure by balancing tax benefits and bankruptcy costs, while the latter focuses on the impact of conflicts of interest between shareholders, managers, and creditors on financing decisions.
- Enseignant: Nadia Zouggaret