The most notable capital structure theories today are the traditional pecking order theory, tradeoff theory and market timing theory. The first two theories hypothesize a semi-strong efficiency in the capital markets, whereas the market timing theory sees the capital market more or less inefficient. Thus, market timing theory allows the idea of managerial persons to be able to time the market, ...

This study examines the association between firms’ environmental, social, and governance (ESG) performance cost of capital for largest European firms listed on STOXX Euro 600 in a large panel from 2002 to 2018. We find that ESG is priced by both debt equity markets, although different directions. While better associated with lower equity, relationship positive regarding debt. also account indus...

Abstract Using a sample of publicly listed banks from 62 countries over the 1991–2017 period, we investigate impact capital on banks’ cost equity. Consistent with theoretical prediction that more equity in mix leads to fall firms’ costs equity, find better capitalized enjoy lower costs. Our baseline estimations indicate 1 percentage point increase bank’s equity-to-assets ratio lowers its by abo...

This article describes the components that should be included as indirect costs to be consistent with economic theory in studies conducted from a societal perspective. The recently proposed method of how to estimate indirect costs, the friction-cost approach, is shown to exclude many aspects of these indirect cost components. Furthermore, it is demonstrated that this approach rests on very stro...

This paper analyzes how human capital and economic uncertainty affect capital structure and managerial compensation. We model a competitive industry where wealth constrained managers provide human capital that can be transferred across firms, and where equityholders give managers access to the physical assets of the firm. Equityholders and managers bargain for the firm’s stochastic free cash fl...