Study For Relation Between Capital Structure And The Corporation Value

The relation between the capital structure and the value of corporation always is the important question of financial theory for study. From the developing history of the financial theory, the theory that think the capital structure is relative to the corporation value is accepted generally by the theory field. But different theory has different answer to the question: how does capital structure influence the corporation value? This article mainly using the economic profit model as the method to estimate the corporation value, think that it is by tow ways that the capital structure influence the corporation value. The first way is that the capital structure can influence the capital cost and then influence the corporation value. The way that the capital structure influences the debt capital cost is different from that the capital structure influences the ownership capital. It is this difference that makes the WACC change as the capital structure changes. The capital structure that makes the WACC be lowest is the best capital structure and at this point the corporation value is the highest; The second way is that the capital structure can influence the corporation by influencing the corporation governing structure and governing efficiency. The goal of corporation governance and the goal of capital structure have inherent continuity. Both of them are maximizing the corporation value. The functions of the creditors and the shareholders are different from each other and the change of the capital structure cause the redistribution of relative rights. This can make the corporation governing structure and governing efficiency change and at last make the corporation value change.