New Meaningful Effects in Modern Capital Structure Theory

Authors

  • Peter Brusov Department of Data Analysis, Decision Making, and Financial Technology, Financial University under the Government of Russian Federation, Moscow
  • Tatiana Filatova Department of Corporate Finance and Corporate Governance, Financial University under the Government of Russian Federation, Moscow
  • Natali Orekhova High Business School, Southern Federal University, Rostov-on-Don
  • Veniamin Kulik Department of Management, Financial University under the Government of Russian Federation, Moscow,
  • Irwin Weil Northwestern University, Evanston

Keywords:

Brusov- Filatova- Orekhova theory, Modigliani- Miller theory, trade off theory, ratings, new effects in corporate finance.

Abstract

Paper is devoted to describe the new meaningful effects in capital structure theory, discovered within modern theory of capital cost and capital structure, created by Brusov, Filatova and Orekhova (BFO theory). These qualitatively new effects are present in general version of BFO theory and absent in its perpetuity limit (Modigliani - Miller theory). BFO theory has changed some main existing principles of financial management. Discovered effects modify our understanding of financial management and dictate some unusual managerial decisions.

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Published

2018-03-09

Issue

Section

Special Issue - RECENT DEVELOPMENT OF CAPITAL STRUCTURE THEORY AND ITS APPLICATIONS