Capital Structure And Capital Value

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The factors affecting the firm’s value been the subject of considerable studies for both academics ‎and professionals, especially how capital structure decision affects firm value in what way and to ‎what extent. However, the overall effect of leverage on firm’s value is still a debatable issue and ‎there is no certainty about it. This research aims to examine the impact of capital structure decision ‎on firm value for firms listed on American stock exchanges and included within S&P 500 index, in ‎addition to examining determinants of leverage. Furthermore, the research tested empirically the ‎influence of leverage structure on firm value given different growth and size opportunities of firms ‎included in sample. The sample included
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For example, a positive relationship were reported by ‎some studies like (Rathinasamy et al. (2000), Dalbor et al. (2007), Cheng and Tzeng (2011), Altan ‎and Arkan (2011), Sudivat et al.(2012), Ogbulu and Emeni (2012)), while other studies reported a ‎negative relationship (Rayan (2008), (Aggarwal and Zhao (2007), Aggarwal et al. (2011)). On the ‎other hand, other studies reported a positive correlation for firms with low–growth and negative ‎correlation for firms with high-growth (Chen (2002), Alonso at el. (2005),McConnel and Servaes …show more content…
Stulz (1988), Aggarwal and Kyaw (2006) argues that debt can ‎have a positive and negative effect on firm value through the optimal debt structure selection ‎by balancing the agency costs and other debt associated costs against benefits obtained of ‎debt financing to the firm as a whole. While Jensen (1986), Myers (1993) and Stulz (1988) ‎claimed that the debt can have a positive or negative effect on the firm value which is ‎depended on the firm’s future investment opportunities. This existence of such relationship, ‎we used to build our hypotheses

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