This paper disproves that the second proposition by Modigliani and Miller (1958), which states that the yield of a firm is an increasing function of the debt/equity ratio. If that proposition were valid, all firms should borrow unlimitedly. This paper points out how M&M manipulated the...

When a nation can finance its investments via foreign-currency denominated debt or domestic-currency claims, what is the optimal capital structure of the nation? Building on the functions of fiat money as both medium of exchange, and store of value like corporate equity, our model connects...

This paper examines the timing behaviour of firms in the UK. We estimate intrinsic value of firms' equities and find that managers do indeed time security issue which leads them to deviate away from target leverage levels. We further find that equity mispricing influences issue decisions as well...

This paper argues that banks should not be treated as intermediaries of loanable funds in order to determine optimal bank capital structure. This is because banks create deposits through the process of lending. The Modigliani–Miller analysis cannot be applied to banks because when lending...

Using a standardized methodology, we empirically evaluate 56 determinants of capital structure proposed in the literature in terms of economic significance, statistical significance, identification, and intertemporal stability. We organize the determinants into a framework in which each proposed...

Some advocates of far higher capital requirements for banks invoke the Modigliani-Miller theorem as grounds for judging that associated costs would be minimal. The M&M theorem holds that the average cost of capital to the firm is independent of capital structure, because any reduction in capital...

Asset securitization offers banks the possibility of altering their capital structures and the financial intermediation process. This study shows that the introduction of securitization is associated with fundamental changes in the funding policies of banks. In particular, we present evidence of...

Asset securitization offers banks the possibility of altering their capital structures and the financial intermediation process. This study shows that the introduction of securitization is associated with fundamental changes in the funding policies of banks. In particular, we present evidence of...

This research study was undertaken to understand if there were any significant changes in variables influencing the capital structure decisions of BSE 500 companies in the post period of recession in comparison with the pre- period of recession. A further endeavor was made in this article to...

This paper demonstrates that the Modigliani Miller Theorem on capital structure does in general not apply to banks when faced with endogenous liquidity risk in form of bank runs and asset illiquidity. The Modigliani Miller Theorem states that under certain assumptions, firms with different...