27
Mar
Factors Determining Capital Structure Of A Firm. Factors affecting the capital structure as the dependent variable is the independent variable as follows. The study suggests that the performance of any company hinges around its ability to operate on a capital structure. Capital structure as its name itself signifies is the composition of the capital employed by the firm from various sources of finance. In the capital structure literature the relevant variables explaining capital structure of firms are based on the three principal theoretical models of capital structure.
Equity capital and preferred capital and debt capital. If it wants to retain a high degree of control it will prefer debts over equity. Dividend paid on equity and preference share capital are not allowed as tax deduction. 1 Collateral Value Of Assets value line of assets 2 Non-Debt Tax Shield NDTS 3 Growth growth 4 uniqueness uniqueness 5 industry Classification type of industry. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares. The purposes of this study are 1 to determine how these four factors influencing capital structure decisions namely industry variable firm-specific variables stock market circumstance.
In the capital structure literature the relevant variables explaining capital structure of firms are based on the three principal theoretical models of capital structure.
Factors Determining Capital Structure Capital structure has to be decided initially at the time when a company is incorporated. It comprises of both owners capital ie. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares. Tax rates play a major role in determining the capital structure. The Regularity of Earnings -A firm with large and stable incomes may incur more debt in its capital structure unlike the one that is unstable. 1 Collateral Value Of Assets value line of assets 2 Non-Debt Tax Shield NDTS 3 Growth growth 4 uniqueness uniqueness 5 industry Classification type of industry.