Starts out with the classic Miller-Modigliani irrelevance theorem, which describes a frictionless financial markets set-up. Various deviations from this set-up, particularly with respect to agency costs, information asymmetries, and taxes, are then introduced. Students will also study how these market imperfections affect firms’ dividend policies and capital structures.
Starts out with the classic Miller-Modigliani irrelevance theorem, which describes a frictionless financial markets set-up. Various deviations from this set-up, particularly with respect to agency costs, information asymmetries, and taxes, are then introduced. Students will also study how these market imperfections affect firms’ dividend policies and capital structures.
