Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183157
Authors: 
Rizov, Marian
Year of Publication: 
2001
Citation: 
[Journal:] EMERGO Journal of Transforming Economies and Societies [ISSN:] 1233-3115 [Volume:] 8 [Issue:] 4 [Pages:] 74-86
Abstract: 
The paper reviews and interprets capital structure theory in a stylized way and explains the conceptual issues, consequences, and implications for financial management. Firms face an uncertain world that does not co-operate with many of the assumptions of the theory. Specific attention is paid to the important issues concerning the capital structure of firms in transition economies. By reconciling empirical evidence with theory practical strategies for managing capital structure in transition are suggested. Thus the higher the risk and volatility in the economy, the lower the proportion of debt in the capital structure should be. Reserving some unused good debt capacity is useful to provide flexibility and lead to increase in firm value.
Subjects: 
capital structure
transition economies
financial management
soft budget constraint
JEL: 
G30
P20
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)

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