1-According to M and M proposition 1 and 2, discuss the factors that will influence...
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Finance
1-According to M and M proposition 1 and 2, discuss the factors that will influence the capital structure of a public listed company.
- Reduce conflict between manager and shareholder, so can reduce agency cost.
- Asynmetric information between issuer and merchant bank
-M and M admit that with corporate tax, Tax saving due of increase debt.
- Finance Distress cost, occus when promises are broken as result of having too much debt.
- Transaction cost in arbitrage proses.
2- Why timing, current gearing ratio and dilution of share are important when we do financing. (300words)
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