Answered You can hire a professional tutor to get the answer.
Create a 5 page essay paper that discusses Undertake a of the current to identify the key determinants of capital structure since the global financial crisis.Undertake a review of the current literatu
Create a 5 page essay paper that discusses Undertake a of the current to identify the key determinants of capital structure since the global financial crisis.
Undertake a review of the current literature to identify the key determinants of capital structure since the global financial crisis
It is duly considered to be an important aspect and every organisation is required to consider it in order to make sure that the operations are conducted in an efficient manner. Moreover, Miller (2003) signified that capital structure impose direct impact in the mission and also in the operations of an organisation. A proper assessment and maintenance of capital will eventually facilitate in managing the financial operations of an organisation effectively (Miller, 2003). With this concern, this paper intends to discuss about identifying the major determinants of the capital structure impacting business organisations since the worldwide financial crisis. Literature Review Capital Structure is an Important Facilitator for Financial Decisions According to Baker &. Wurgler (2002), capital structure plays a decisive role in making effective financial decisions. The authors affirmed that management of business organisations utilise capital structure in making better exploitation of accessible financial recourses. It also assists in having a proper assessment and estimating their shares in the business markets. Additionally, the management with the assistance of capital structure is capable to determine the quantity of leverage that it possesses in the marketplace and also in comparison with other organisations. (Mahmud &. et. al., 2009. Baker &. Wurgler, 2002). Baker &. Martin (2011) noted that capital structure is an important instrument of making effective decisions in relation to various significant aspects that include dividend decisions, management decision making along with financial decisions among others. According to Baker &. Martin (2011), three important theories of capital structure encompass the ‘market timing theory’, the ‘trade-off theory’ and the ‘pecking order theory’. In this regard, the ‘trade-off theory’ is a model on the basis of which tax benefits and liabilities are calculated to maintain a stable balance of financial considerations of business organisations. The ‘pecking order theory’ provides important and valuable information, aiding in identifying problems, so that the management of organisations can adopt appropriate measures to mitigate such problems. The ‘market timing theory’ is a model, which assists management of business organisations in ascertaining the appropriate time of issuing shares in the market. In this regard, Baker &. Martin (2011) have also implied that management of business organisations with the assistance of these theories will be facilitated with the opportunity of making effective investment decisions and attaining superior competitive position (Baker &. Martin, 2011. Laugi &. Sorin, 2009). Determinants of Capital Structure since the Global Financial Crisis According to Bauer (2004), the capital structure of business organisations mainly comprise various vital factors such as size, tangibility, profitability, industry classification, tax and growth opportunity among others. It can be affirmed that these vital factors associated with the notion of capital structure impose considerable impact upon the financial transactions along with the operations of an organisation in an immerse manner.
