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Capital Structure and Ownership Structure



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The Journal of Online Education New York January 2009 Capital Structure and Ownership Structure A Review of Literature by BOODHOO Roshan ASc Finance BBA Hons Finance BSc Hons Banking International Finance Email roshanboodhoo intnet mu Tel 230 7891888 Introduction Abstract There have always been controversies among Capital Structure is a mix of debt and finance scholars when it comes to the subject of equity capital maintained by a firm capital structure So far researchers have not yet structure is also referred as financial structure of reached a consensus on the optimal capital a firm The capital structure of a firm is very structure of firms by simultaneously dealing with important since it related to the ability of the firm the agency problem This paper provides a brief to meet the needs of its stakeholders Modigliani review of literature and evidence on the and Miller 1958 were the first ones to landmark relationship and the topic of capital structure and they argued that The paper also provides capital structure was irrelevant in determining the theoretical support to the factors determinants firm s value and its future performance On the which affects the capital structure other hand Lubatkin and Chatterjee 1994 as between ownership structure capital structure Capital well as many other studies have proved that there Keywords Capital Structure Ownership Structure Agency Theory Leverage Corporate Finance exists a relationship between capital structure and firm value Modigliani and Miller 1963 showed that their model is no more effective if ABOUT THE AUTHOR tax was taken into consideration since tax Roshan Boodhoo is interested in researching a wide range of economic finance and business related topics He is currently completing a Master of Arts in Finance and Investment at the University of Nottingham as well as an Executive Master of Business Administration at the Institute of Business Management Studies subsidies on debt interest payments will cause a rise



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