Can I read Financial Distress and Capital Structure on EtoBox?
Financial Distress and Capital Structure by palkee is a document available to read on EtoBox.
What is Financial Distress and Capital Structure about?
Financial distress arises when a firm is unable to pay interest or principal on debt. Using 100% debt would maximize interest tax shields but also maximize financial distress costs. The optimal capital structure balances these tax benefits and distress costs. Managers consider flexibility, risk, income, control and timing (FRICT analysis) in determining their target capital structure. Asymmetric information and pecking order theories also influence capital structure decisions.
- Author
- palkee
- Language
- EN