D. Chernenko, PhD Student Kyiv National Economics University named after Vadym Hetman, Kyiv, Ukraine MODERN PARADIGM IN CAPITAL STRUCTURE STUDIES

This article presents a review of capital structure studies paradigm, founded by the Miller- Modigliani theorem. The research includes a brief view on origins of capital structure issue, importance of the Miller- Modigliani theorem for modern research, and current agenda of modern studies. The article also suggests post-soviet scholars to adopt and use modern theories and methodology.

Keywords: capital structure; firm capital; financing sources; modern finance theory; corporate finance studies

Date of submission 26.07.16

DOI: https://doi.org/10.17721/1728-2667.2016/185-8/6


  1. Baker, H.K. & Martin, G.S., 2011. Capital structure and corporate financing decisions: theory, evidence, and practice, John Wiley & Sons. ISBN 9780470569528.
  2. Weston, J.F., 1994. ‘A (relatively) brief history of finance ideas’, Financial Practice and Education, 4, no. 1, pp. 7-26.
  3. Dewing, A.S., ‘Corporate promotions and reorganizations’, Harvard University Press, vol. 10. Available at:https://archive.org/details/corporatepromot00dewigoog
  4. Durand, D., 1952. ‘Costs of Debt and Equity Funds for Business: Trends and Problems of Measurement’, Conference on Research in Business Finance, 216-262. Available at: http://www.nber.org/chapters/c4790.pdf
  5. Harris, M. & Raviv, A., 1991. ‘The theory of capital structure’, The Journal of Finance, 46, no. 1, pp. 297-355. doi:10.1111/j.1540- 6261.1991.tb03753.x
  6. Modigliani, F. & Miller, M.H., 1958. ‘The cost of capital, corporation finance and the theory of investment’, The American economic review, 48, no. 3, pp. 261-297.
  7. Modigliani, F. & Miller, M.H., 1963. ‘Corporate income taxes and the cost of capital: a correction’, The American economic review, 53, no. 3, pp. 433-443.
  8. Miller, M.H., 1977. ‘Debt and taxes’, The Journal of Finance, 32, no. 2, pp. 261-275. doi:10.1111/j.1540-6261.1977.tb03267.x
  9. Ross, A., Westerfield, R. & Jordan, B.D., 2010. Fundamentals of corporate finance, Standard Edition, 9th Edition, McGraw-Hill Create. ISBN 9780073382395.
  10. Myers, S.C., 2001. ‘Capital structure’, Journal of Economic perspectives, 15, no.2, 81-102. doi:10.1257/jep.15.2.81
  11. Levati, M.V., Qiu, J. & Mahagaonkar, P., 2012. ‘Testing the Modigliani-Miller theorem directly in the lab’, Experimental Economics, 15, no. 4, pp. 693-716. doi: 10.1007/s10683-012-9322-z
  12. Modigliani, F. & Miller, M.H., 1959. ‘The cost of capital, corporation finance, and the theory of investment: Reply’, The American Economic Review, 49, no. 4, pp. 655-669.
  13. Myers, S.C., & Majluf, N.S. 1984, ‘Corporate financing and investment decisions when firms have information that investors do not have’, Journal of financial economics, 13 no. 2, pp. 187-221. doi:10.1016/0304-405X(84)90023-0
  14. Ross, S.A., 1977. ‘The determination of financial structure: the incentive-signalling approach’, The bell journal of economics, vol. 8, no. 1, pp. 23-40. doi:10.2469/dig.v27.n1.2
  15. Jensen, M.C., 2001. ‘Value maximization, stakeholder theory, and the corporate objective function’, Journal of applied corporate finance, 14, no. 3, pp. 8-21. doi:10.1111/j.1745-6622.2001.tb00434.x
  16. Graham, J.R. & Leary, M.T., 2011. ‘A Review of Empirical Capital Structure Research and Directions for the Future’, Annual Review of Financial Economics, vol. 3, pp. 309-345.
  17. Myers, S.C., 2015. ‘Finance, Theoretical and Applied’, Annual Review of Financial Economics, 7, pp. 1-34. doi: 10.1146/annurev-financial-111914- 042056
  18. Welch, I., 2013. ‘A Critique of Recent Quantitative and Deep-Structure Modeling in Capital Structure Research and Beyond’, Critical Finance Review, 2, no. 1, pp. 131-172. doi:10.1561/104.00000006