IDEAS home Printed from https://ideas.repec.org/a/fru/finjrn/150207p60-72.html
   My bibliography  Save this article

Finding an Optimal Capital Structure under Default Risk

Author

Listed:
  • Pavel E. Zhukov

    (Financial University under the Government of the Russian Federation)

Abstract

The article offers a practical way to introduce default risk in the Modigliani-Miller theory and deduces the theorem of optimal capital structure, which is similar to the Modigliani-Miller last theorem, but taking into account default risk. Separately the author provides the amendments of default risk to required income on debt and equity. The major outcome is that the classical Modigliani-Miller theory is true, but only when the debt does not exceed safe level, while the interest demanded by creditors does not change and the optimum structure of the capital probably is reached at the size of a debt equal to maximum safe level.

Suggested Citation

  • Pavel E. Zhukov, 2015. "Finding an Optimal Capital Structure under Default Risk," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 60-72, April.
    • Handle: RePEc:fru:finjrn:150207:p:60-72
    as

    Download full text from publisher

    File URL: http://www.nifi.ru/images/FILES/Journal/Archive/2015/2/statyi_2015_2/07_zhukov.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fru:finjrn:150207:p:60-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gennady Ageev (email available below). General contact details of provider: https://edirc.repec.org/data/frigvru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.