This paper broadens perpetuity gain to level (GL) research by analyzing the role of growth within the capital structure model (CSM) formalized by Hull (2007). We contrast the cost of using internal equity versus external equity when expanding a firm's assets. Contrary to pecking order theory, we...

This paper broadens perpetuity gain to leverage (GL) research by analyzing the role of growth within the Capital Structure Model (CSM) formalized by Hull (2007). We demonstrate that internal equity is more expensive than external equity due to the double corporate taxation of cash flows...

Purpose – The purpose of this paper is to instruct advanced business students on the debt-equity choice by showing how wealth transfers between security holders influence security values when a levered firm undergoes an incremental debt-to-equity approach. Design/methodology/approach – The...