The Capital Structure Puzzle.

MYERS, S. C. (1984). The Capital Structure Puzzle. Journal of Finance, 39(3), 575-592.

Type

Journal article

Intellectual base

Primary research

Year

1984

DOI

10.1111/j.1540-6261.1984.tb03646.x

Link

https://doi.org/10.1111/j.1540-6261.1984.tb03646.x

Cited from

economics_finance, philosophy

Cited by

2 citations across 2 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Frictionless Benchmark Reasoning
  • The catalog of named deviations then constitutes the entire real-world theory: the tax shield of debt, the costs of financial distress, agency costs of debt and equity, and signalling under asymmetric information — each a separately named friction with its own quantitative apparatus.

    This sourceSurveys the named frictions — tax shields, distress costs, agency costs, asymmetric-information signalling — that constitute capital-structure theory as the deviation catalogue from Modigliani–Miller.

• Zero-Force Null Baseline
  • A treasurer observing that levering up raised the firm's value attributes the gain to the tax shield (interest deductibility, a named tax-force deviation); observing that pushing leverage further eventually destroys value attributes the loss to rising expected bankruptcy costs (a named distress-force deviation); the trade-off theory of optimal capital structure is literally the sum of these two named departures against the MM reference.

Verification

This reference passed the adversarial substantiation pipeline: it was checked to exist and to support the claim it is attached to. See how references were verified.

Registry ID ref:eca7e1f7ecbf · see in the full table