Capital Structure Theory: a Current Perspective

ArXiv ID: ssrn-1278892 “View on arXiv”

Authors: Unknown

Abstract

Finance scholars’ approach to capital-structure issues reflects a progression of thought over time. This note provides an overview of the current state of capit

Keywords: Capital Structure, Corporate Finance, Debt Policy, Financial Management, Equities

Complexity vs Empirical Score

• Math Complexity: 3.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Philosophers
• Why: The paper is a conceptual review of capital structure theory, presenting theoretical frameworks without complex mathematical derivations or empirical testing.

  flowchart TD
    A["Research Goal: Determine Optimal<br>Capital Structure in Modern Context"] --> B{"Key Methodology: Review & Synthesis"}
    
    B --> C["Data/Inputs:<br>Historical Theories &<br>Empirical Evidence"]
    
    C --> D["Computational Process:<br>Comparative Analysis of<br>Trade-Off, Pecking Order, &<br>Market Timing Theories"]
    
    D --> E["Outcome 1: Trade-Off Theory<br>Valid for Tax Shield &<br>Financial Distress Balance"]
    
    D --> F["Outcome 2: Pecking Order Theory<br>Valid under Information<br>Asymmetry Constraints"]
    
    D --> G["Outcome 3: Market Timing<br>Explains Short-Term<br>Financing Fluctuations"]
    
    E & F & G --> H["Final Perspective: No Single<br>Universal Theory; Context-<br>Dependent Optimal Structure"]