IDEAS home Printed from https://ideas.repec.org/a/fru/finjrn/150607p67-79.html
   My bibliography  Save this article

Influence of Tax Shields, Default Risk and Transaction Costs on the Average Cost of the Capital

Author

Listed:
  • Pavel E. Zhukov

    (Financial University under the Government of the Russian Federation)

Abstract

The work purpose is a construction of the theoretical model for an estimation of possible joint influence of tax shields, default risk and transaction costs on the average cost of the capital, taking into account the results of classical works of Myers, Fama and French. Transaction costs are estimated as a difference between bond yield at issue and bond market yield. It is shown that the capital structure practically does not depend on tax shields, but essentially depends on transaction costs and default risk. The optimal capital structure is reached at the level of a debt equal to the maximal safe size.

Suggested Citation

  • Pavel E. Zhukov, 2015. "Influence of Tax Shields, Default Risk and Transaction Costs on the Average Cost of the Capital," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 67-79, December.
    • Handle: RePEc:fru:finjrn:150607:p:67-79
    as

    Download full text from publisher

    File URL: http://www.nifi.ru/images/FILES/Journal/Archive/2015/6/statyi/fm_2015_6___07.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fru:finjrn:150607:p:67-79. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gennady Ageev (email available below). General contact details of provider: https://edirc.repec.org/data/frigvru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.