Capital structure

Introduction: The capital structure is defined by the firm’s policy with regard to leverage and dividend payments. It is of major importance in corporate governance because it can determine the incentives of managers and thereby the economic efficiency of the corporations they manage. A classic reference on capital structures is Jensen [1986].

Contents

• Table - Hypotheses: Effects of the capital structure on corporate performance and other other kinds of institutions of relevance for corporate governance.
• Model - The classic capital structure theory by Modigliani and Miller: The irrelevance of capital structure in perfect capital markets.
• Table - International corporate governance: Tentative characterizations of legal and empirical state of large firm capital structure as of 1980-95: 1) Developing countries. 2) Germany. 3) Japan. 4) Anglo-American countries. 5) Denmark.