A Mean-Variance Theory of Optimal Capital Structure and Corporate Debt Capacity

@article{Kim1978AMT,
  title={A Mean-Variance Theory of Optimal Capital Structure and Corporate Debt Capacity},
  author={E. H. Kim},
  journal={Journal of Finance},
  year={1978},
  volume={33},
  pages={45-63}
}
  • E. H. Kim
  • Published 1978
  • Economics
  • Journal of Finance
  • AN ISSUE OF CONCERN to the theory of business finance over the past two decades has been the effect of financial structure on the valuation of firms. The traditional presumption is that a firm's value is a concave function of its financial leverage, and that an optimal financial leverage exists where the slope of the function is zero.' This argument is suspect to the extent that it attempts to value a firm's securities in isolation from the rest of the capital market. The pathbreaking works by… CONTINUE READING
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