This review evaluates the four major theories of corporate financing: (1) the Modigliani–Miller theory of capital-structure irrelevance, in which firm values and real investment decisions are unaffected by financing; (2) the trade-off theory, in which firms balance the tax advantages of...

This article tests the role the Slovenian capital market plays in determining corporate capital structure. It concludes that even though private corporations exhibit higher relative debt levels than their public counterparts, their dynamics are governed in similar ways. One potential reason for...

We investigate the dynamics of observed and target leverage ratios and deviations from the targets. The cross-sectional persistence in observed leverage ratios is driven by highly persistent targets, whereas the time series variation is driven by transitory deviations from targets. Deviations...