Critical review of the Gearing Theory 3.1 Traditional Gearing theory Skare (2002) stated in his research that the traditional gearing theory excludes the short-term financing from the cost of capital calculation which the firm’s capital structure can be viewed as a required rate of return that must be earned on an investment leaving the firm’s value unaffected which supported the traditional gearing theory. Afrasiabishani (2012) also supported the traditional theory by stating that traditional approach
Franco Modigliani was born in Rome in 1918 to Enrico Modigliani and Olga Flaschel. His father worked as a successful pediatrician while his mother was a social worker. As a young child and in his early teenage years Franco did not distinguish himself academically, this lackluster performance was further compounded by the untimely passing of his father in 1932, due to an unsuccessful surgery. It was only after a transfer to "Liceo Viscont" an extremely well-regarded academic school that Franco began
out in developed countries apply to Nigeria? Which of the capital structure theories apply to Nigeria: the trade-off theory or the Pecking order theory? This paper conducts a critical survey of the key literature in order to isolate the leading theoretical and empirical issues surrounding capital structure choice of firms in developed economies and apply these to firms in Nigeria in order
5.5 Capital Structure Analysis (pg-53) A firm’s capital structure primarily comprises of two components, the Debt and the equity. Debt: A sum of money that is owed or due. Whatever a company has on its own, money, goods, services & other liabilities of the company which are due all comes in this heading Debts. Equity: The value of Share issued by a company. It is commonly referred as the ordinary share, partial ownership, maximum entrepreneurial risk associated with the company. These shareholders