The Theory of Capital Structure
- Full Text PDF
- Author(s): MILTON HARRIS, ARTUR RAVIV
- Published: Apr 30, 2012
- Pages: 297-355
- DOI: 10.1111/j.1540-6261.1991.tb03753.x
This paper surveys capital structure theories based on agency costs, asymmetric information, product/input market interactions, and corporate control considerations (but excluding tax‐based theories). For each type of model, a brief overview of the papers surveyed and their relation to each other is provided. The central papers are described in some detail, and their results are summarized and followed by a discussion of related extensions. Each section concludes with a summary of the main implications of the models surveyed in the section. Finally, these results are collected and compared to the available evidence. Suggestions for future research are provided.