The Importance of Financial Theories for SME Capital Structure Decisions

This chapter aims to analyze the importance of financial theories for SME capital structure decisions. The financial theories considered for this study were trade-off theory and pecking order theory. From the various empirical evidences researched in the Web of Science and Scopus database, it was found that most SME capital structure decisions follow the financial theory of hierarchical hierarchy, that is, the SME finance their investment opportunities through retained earnings, debt issuance, and finally stock issuance.info:eu-repo/semantics/publishedVersio

Optimal Capital Structure for Maximizing the Firm Value

Book title: Valuation Challenges and Solutions in Contemporary Businesses -- Chapter title:Optimal Capital Structure for Maximizing the Firm Value, BİLGİN RÜMEYSA, Publisher :IGI Global, Editör:Derindere-Köseoğlu Sinem, ISBN:9781799810865, Bölüm Pages:41 -59Capital structure decisions of management affect the value of a firm. This fact leads to the creation of an extremely rich capital structure literature over the last 60 years. This chapter explains main theories of capital structure and discusses the concept of target leverage which maximizes the firm value. The roles of tax payments, profitability, firm size, asset tangibility, growth opportunities, income volatility, and non-debt tax shields are examined as determinants of capital structure. The current status of capital structure research and some important empirical issues are discussed. Considerations for future research are presented