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Capital Structure Impact On Market Value Of Merging Companies

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  • V. S. Martynova

Abstract

As a rule there are significant changes in the capital structure due to mergers and takeovers that's why the management task at the prediction stage is a correct evaluation of these changes influence on the cost of the future company. This article contains methods of evaluating the capital structure influence on the company cost within different evaluation approaches and the most detailed description of the methods used within the income approach. Here is a method of calculating a weighted average cost of capital based on the capital asset pricing model (CAPM) and restrictions connected with this model use. It is defined whether there is a necessity to correct the predicted cost of attracting own or borrowed assets.

Suggested Citation

  • V. S. Martynova, 2014. "Capital Structure Impact On Market Value Of Merging Companies," Strategic decisions and risk management, Real Economy Publishing House, issue 5.
  • Handle: RePEc:abw:journl:y:2014:id:266
    DOI: 10.17747/2078-8886-2011-5-102-105
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