IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Analysis of the influence factors on the capital cost

Listed author(s):
  • Popescu, Eleodor
Registered author(s):

    The capital structure refers to the long-term financing types used by the enterprises (for example, reinvested profit, long-term shares and debts) and the way they are financed by a combination of the own capital and debts. An optimal structure of the capital involves making some important decisions regarding the maximization of the enterprise value by their managers. But these decisions are not important only for maximizing the enterprise value, but also for the impact they have on the enterprises ability to face the competition existing on the market. An optimal structure of the capital should provide to the shareholders bigger gains than the ones they would gain from an economical entity fully financed by the own capitals. In the attempt to explain the way the enterprises finance their assets and the factors influencing these financing decisions, a series of theories and models of the capital structure have been suggested. These theories and models try to explain the percentage of the debts and of the own capital found in the enterprises balance sheet. Among the theories of the capital structures that have been imposed in time, Modigliani and Miller’s theorem (1958) may be considered as the starting point of explaining the capital structure, although, it subsequently proved to be a purely theoretical model with no solid empiric funding . The basic idea of this classic theory is that, in the absence of the taxation and on a perfect market, the value of an enterprise is not influenced by the way it is financed.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    File Function: original version
    Download Restriction: no

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 31719.

    in new window

    Date of creation: 15 Jun 2011
    Handle: RePEc:pra:mprapa:31719
    Contact details of provider: Postal:
    Ludwigstraße 33, D-80539 Munich, Germany

    Phone: +49-(0)89-2180-2459
    Fax: +49-(0)89-2180-992459
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:31719. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.