answersLogoWhite
Investing and Financial Markets
Essays
Charles Darwin
The Difference Between

Static trade-off theory relation to agency theory of capital structure?


Top Answer
User Avatar
Wiki User
Answered 2009-07-18 08:47:51

Trade-off theory of capital structure basically entails offsetting the costs of debt against the benefits of debt. MM 1963 introduced the tax benefit of debt. Later work led to a optimal capital structure which is given by the trade off thoery. The first element usually considered as the cost of debt is usually the financial distress costs or bankruptcy costs of debt. It is important to note that this includes the direct and indirect bankruptcy costs. Trade-off theory can also include the agency costs from agency theory as a cost of debt to explain why companies dont have 100% debt as expected from MM 1963. 95% of empirical papers in this area of study looks at the conflict between managers and shareholders. The others look at conflicts between debtholders and shareholders. Both are equally important to explain how the agency theory is related to the trade-off theory. The introduction of a dynamic trade-off theory makes the predictions of the this theory a lot more accurate and reflective of that in practise.

001
๐Ÿ™
0
๐Ÿคจ
0
๐Ÿ˜ฎ
0
๐Ÿ˜‚
0
User Avatar

Your Answer

Loading...

Still Have Questions?

Related Questions

What does dynamic structure mean?

it is something to do with buildings and static


Why array is called static data structure?

The structure of an instance of array is FIXED (static, not changing) throughout its life time. The content of that array may be changed over the life time (it maybe very brief, or across decades), but the internal structure, the number of the elements are steady, stable, or static (not changed).


What are static load and dynamic load?

A static load is the effect of gravity on an object or structure.A dynamic load is the forces that move or change when acting on a structure.Example of a dynamic load:Force of wind or the weight of a truckExample of a static load:Weight of a bridge


Different between dynamic data structure and static data structure with appropriate diagrams?

In dyanamic data structure emory allocation for the data structure takes place at run time,only requered amount of memory is allocated(eg.linked lists).In static data structure memory is reseved at the time of compilation(eg.arrays).


Static data structure and dynamic data structure?

A static data structure is any structure where the size of the structure is known at compile time and can therefore be statically allocated within the program's own data segment (the stack). A dynamic data structure is one where the initial size is unknown at compile time, or where the size of the structure may vary at runtime, and must be dynamically allocated upon the heap (the free store).


Are minorities scholarships still available after you have already started college?

Both static and dynamic structures are the sequence of statements. The only difference is that the sequence of statements in a static structure is fixed, whereas in a dynamic structure it is not fixed. That means


What are three ways to think of characters in relation to real people?

There are round character,dynamic character and static character


What is the difference between a static shape and a dynamic shape?

A static shape has a fixed relationship between all of its vertexes. A dynamic shape can vary the position of at least one of its vertexes in relation to the others.


What is the difference between a static shape and a dynamic shapes?

A static shape has a fixed relationship between all of its vertexes. A dynamic shape can vary the position of at least one of its vertexes in relation to the others.


How does PHP differ from HTML in terms of application and structure?

In structure <?php ?> <html> </html> in application - one is static and another is dynamic. this much ......


Compare between static packet filters dynamic packet filter and proxy-based firewall in relation to security?

Nitrogen


What is the relation between art and religion?

Art is but a representation or a portrayal of that which man has done, it is static. Whereas Religion portrays that which man is actively engaged in.


Can a static magnet induce an emf in a stationary coil of wire?

No. In order to induce an EMF, the coil and the magnet must be moving in relation to each other.


Who worked out that Kinetic had an opposite at all because it doesn't Potential is having the prospect of becoming kinetic so how is that an opposite What could be still in relation to all else?

Actually, the opposite of Kinetic is Static. Kinetic means "in motion", static means "not moving".


Do the stars move relative to each other Why?

Yes, they do. Why? Because they can't remain static forever. Assuming they were ever static (motionless) with relation to one another (an assumption that is NOT true), they would start to move, eventually, due to their gravitatioal force on one another.


What is when an object changes its position over time relative to a static reference point?

the answer is motionAn angle.DisplacementMotion is a change in the position of an object in relation to a reference point.


What do you call the movement of a static charge from one object to another?

the relation of the shock can be two of the same thing and that's what makes it because they both are either positive or negetive


What is the difference between static and dynamic friction?

Static friction is the friction that acts between two objects which are not moving in relation to each other. For example, it is the force that prevents you a block from sliding down a ramp with a small incline. Dynamic friction is the friction that acts between two objects which are moving in relation to each other. For example, it is the force that makes pushing a heavy box across the floor difficult.


A static method may not be overriden to be non static?

This is correct. Overridden static methods must be static and overridden non-static methods must not be static.


Is static electricity not really static?

Static electricity is static. It's just shortened.


How does static electricity and magnesium differ?

The question is about comparing two different quantities. Static electricity is a physical phenomenon (for example, heat). It is about the accumulation of electrons or the lack of electrons on insulating surfaces. Magnesium is a metal, a material, that is a conductor and burns brightly when lit. Other than that Magnesium cannot accumulate electrons at the surface to cause static electricity, I don't see any relation.


Define a term tissue as it relates to plants and animals?

A living cellular structure that is predominantly static in it's constitution and part of a living organism.


Why arrays are called static data structure?

An array could be called static because it is generally not changed structurally once it is created, meaning that you do not add, delete or swap the nodes themselves, though you will likely modify the data contained by the nodes. This differs from a more dynamic data structure, such as a linked list, where adding, deleting or swapping nodes is relatively simple.


What is the relation between friction and normal force?

The force of friction is Fs=(coefficient of friction)xFn, where Fs is the force of friction (either static or kinetic) and Fn is the normal force.


Definition of static HTML?

HTML by its very nature is static. If you desire to have a dynamic site, that requires a coding language like PHP, ASP, or other dynamic language. These dynamic languages typically also use HTML to create the structure for a web page.