Capital structure: professional management guidance

Managerial Finance - Tập 37 Số 8 - Trang 788-804 - 2011
RobertStretcher1, SteveJohnson1
1Department of General Business and Finance, College of Business Administration, Sam Houston State University, Huntsville, Texas, USA

Tóm tắt

PurposeCapital structure decisions rely on a complex array of theoretical foundations and practical considerations. At the managerial level, it is impractical to base decisions purely on theory. While one can develop a perception of an optimal capital structure, the decision is often obscured by practical limitations to the theoretical base. In order to be useful to practicing managers, policies and decision techniques need to be efficiently accomplished and based on available information. This paper seeks to provide that practical framework.Design/methodology/approachThis paper recounts the simple theoretical base for capital structure, highlights some of the problems encountered when applying the theory to reality, and suggests a framework for practical managerial decisions about capital structure. This exposition is especially useful in undergraduate business curricula, in particular for finance majors considering professional management as a career.FindingsWhile application of traditional capital structure theory is often impractical, numerous tools are available for use by professional managers to make informed decisions about capital structure.Practical implicationsThe conclusions from this paper provide a framework for current and prospective professional managers for making appropriate capital structure decisions in their management careers.Social implicationsProper managerial techniques and considerations for leverage and capital structure can potentially benefit society through more prudent use of debt, based on the variety of measures presented in this paper.Originality/valueTopics discussed in this paper have been in development since the 1950s. The contribution of this paper is the creation of a framework for understanding and applying these topics, for pedagogical and management training purposes.

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Managerial Finance

Tập 37 Số 8

788-804

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