What does the capital structure theory include (what are the capital structure theories)?

1. What does the capital structure theory include?

2. What theories does the capital structure theory include?

3. What are the capital structure theories?

4. What is the capital structure theory?

1. net income theory: this theory holds that the use of debt can reduce the comprehensive capital cost of enterprises.

2. Because the debt cost is generally low, the higher the debt level, the lower the comprehensive capital cost and the greater the enterprise value.

3. When the debt ratio reaches 100%, the enterprise value reaches the maximum.

4. Net income theory: This theory holds that the capital structure has nothing to do with the enterprise value, and the key factor that determines the enterprise value is the net operating income of the enterprise.

5. Although debt funds reduce the cost of enterprises, they also increase the risk and equity cost of enterprises.

6.MM theory: MM theory holds that in the absence of enterprise and personal income tax, the value of any enterprise, whether it has liabilities or not, is equal to operating profit divided by the rate of return applicable to its risk level.

7. Agency theory: Agency theory holds that the capital structure of an enterprise will affect the working level and other behavior choices of managers, thus affecting the future cash income and market value of the enterprise.

8. Hierarchical financing theory: This theory holds that the cost of debt financing is lower than that of stock financing, but the debt of enterprises should be moderate, and enterprises should maintain a certain debt capacity to cope with possible changes in the future.