SHAREHOLDER LIMITED LIABILITY AND MEAN‐VARIANCE MODELS OF CAPITAL STRUCTURE*
作者:
S. Ghon Rhee,
期刊:
Decision Sciences
(WILEY Available online 1984)
卷期:
Volume 15,
issue 1
页码: 1-13
ISSN:0011-7315
年代: 1984
DOI:10.1111/j.1540-5915.1984.tb01192.x
出版商: Blackwell Publishing Ltd
关键词: Capital Asset Pricing Model;Corporate Finance;Financial Planning and Modeling;and Risk and Uncertainty.
数据来源: WILEY
摘要:
ABSTRACTThis paper demonstrates that shareholder limited liability imposes a restriction on corporate borrowing and that failure to incorporate this restriction into the analysis yields the “reductio ad absurdum” argument against mean‐variance models of optimal capital structure. With corporate income taxes and costless bankruptcy, the firm's value is a monotonically increasing function of debt as long as the amount of debt does not exceed the upper limit imposed by shareholder limited liability. As a result, the introduction of costly bankruptcy into the mean‐variance framework is ju
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