The determination of corporate optimal capital structure under value maximization and informational asymmetry |
| |
Authors: | Eli Talmor |
| |
Affiliation: | Graduate School of Business, University of Wisconsin-Madison, Madison, Wisconsin 53706 USA |
| |
Abstract: | In this article we examine the optimal capital structure of the firm under conditions of informational asymmetry, i.e., when the manager of the firm is viewed by the market as possessing inside information about the firm's future profitability. Unlike previous research on this topic, in this study we preserve the objective of value maximization when examining the signaling property of corporate capital structure. We also recognize explicitly the other consequences of debt financing on the value of the firm. An integrated analysis of the capital structure problem within the context of rational expectation is presented, and a signaling equilibrium is derived and discussed. The nature of the welfare costs that emerge from the existence of informational asymmetry is also analyzed. |
| |
Keywords: | Address reprint requests to Eli Talmor Graduate School of Business University of Wisconsin-Madison 1155 Observatory Drive Madison Wisconsin 53706. USA |
本文献已被 ScienceDirect 等数据库收录! |
|