This paper and its sequel (Financial Leverage Strategy with Transaction Costs, Applied Mathematical Finance 3, 1996, 191-208) pick up the pecking order leverage theory where it was left in 1984 by Stewart Myers (JF v.39) and his joint paper with Nicolas Majluf (JFE v.13). Static tradeoff...

Capital structure plays a significant role in the determination of the value of the firm. The literature is replete with studies that relate to mature capitalist economies in the western world. When the models are applied to less-structured countries of the Middle East, one would question...