A good understanding of the determinants of firms’ capital structures is stillelusive (Barclay and Smith, 2005) notwithstanding the volume of researchsince the seminal 1958 paper of Modigliani and Miller (MM). Much of thisresearch has focused on the relaxation of the assumptions made in the MMpaper, and these extensions include variables such as taxes, bankruptcy costs,industrial characteristics, ownership structure and agency costs (Harris and
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