Capital Structure: An Overview

SUMMARY AND CONCLUSIONS Despiteextensiveresearch,financialeconomistsstillviewcapitalstructureasapuz-zle in which all the pieces do not fit perfectly into place. Surveys by Graham andHarvey (2001); Bancel and Mittoo (2004); and Brounen, Dirk, de Jong, and Koedijk(2004, 2006) report gaps between theory and practice involving capital structuredecisions. Although understanding in this area is incomplete and questions stillremain on how firms should determine their financing mix, much theoretical andempirical evidence is available to provide guidance in unraveling the capital struc-ture puzzle. The following chapters offer a wealth of useful information about thefactors that influence capital structure and corporate financing decisions in the realworld. Let’s now begin our journey into one of the most controversial and highlyresearched topics in corporate finance. REFERENCES Baker, H. Kent, and Gary E. Powell. 2005. Understanding Financial Management—A PracticalGuide . Malden, MA: Blackwell Publishing.Baker, Malcolm, and Jeffrey Wurgler. 2002. “Market Timing and Capital Structure.”