# New Meaningful Effects in Modern Capital Structure Theory

Chapter

First Online:

## Abstract

This chapter is devoted to description of the new meaningful effects in capital structure theory, discovered within modern theory of capital cost and capital structure, created by Brusov, Filatova, and Orekhova (BFO theory). These qualitatively new effects are present in general version of BFO theory and absent in its perpetuity limit (Modigliani–Miller theory) (Brusov et al., J Rev Global Econ 7:104–122, 2018a). BFO theory has changed some main existing principles of financial management. Discovered effects modify our understanding of financial management and dictate some unusual managerial decisions.

## Keywords

Brusov–Filatova–Orekhova theory Modigliani–Miller theory Trade-off theory Ratings New effects in corporate finance Investments Taxation and rating## References

- Brusov PN, Filatova ТV (2011) From Modigliani–Miller to general theory of capital cost and capital structure of the company. Finance and Credit 435:2–8Google Scholar
- Brusov P, Filatova T, Orehova N, Brusova A (2011a) Weighted average cost of capital in the theory of Modigliani–Miller, modified for a finite life-time company. Appl Financ Econ 21(11):815–824CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Brusov PP, Brusova N (2011b) From Modigliani–Miller to general theory of capital cost and capital structure of the company. Res J Econ Bus ICT 2:16–21Google Scholar
- Brusov P, Filatova T, Orehova N et al (2011c) Influence of debt financing on the effectiveness of the investment project within the Modigliani–Miller theory. Res J Econ Bus ICT 2:11–15Google Scholar
- Brusov P, Filatova T, Eskindarov M, Orehova N (2012a) Influence of debt financing on the effectiveness of the finite duration investment project. Appl Financ Econ 22(13):1043–1052CrossRefGoogle Scholar
- Brusov P, Filatova T, Eskindarov M, Orehova N (2012b) Hidden global causes of the global financial crisis. J Rev Global Econ 1:106–111Google Scholar
- Brusov P, Filatova T, Orekhova N (2013a) Absence of an optimal capital structure in the famous tradeoff theory! J Rev Global Econ 2:94–116Google Scholar
- Brusov P, Filatova T, Orehova N (2013b) A qualitatively new effect in corporative finance: abnormal dependence of cost of equity of company on leverage. J Rev Global Econ 2:183–193Google Scholar
- Brusov P, Filatova P, Orekhova N (2014a) Mechanism of formation of the company optimal capital structure, different from suggested by trade off theory. Cogent Econ Finance 2:1–13. https://doi.org/10.1080/23322039.2014.946150 CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N (2014b) Inflation in Brusov–Filatova–Orekhova theory and in its perpetuity limit – Modigliani–Miller theory. J Rev Global Econ 3:175–185CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Eskindarov M (2015) Modern corporate finance, investment and taxation, 1st edn. Springer International Publishing, Berlin, pp 1–368CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Kulk V, Weil I (2018a) New meaningful effects in modern capital structure theory. J Rev Global Econ 7:104–122CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Kulk V (2018b) A “golden age” of the companies: conditions of its existence. J Rev Global Econ 7:88–103CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Kulk V (2018c) Rating methodology: new look and new horizons. J Rev Global Econ 7:63–87CrossRefGoogle Scholar
- Brusov P, Filatova T, Orehova N, Kulk V (2018d) Rating: new approach. J Rev Global Econ 7:37–62CrossRefGoogle Scholar
- Brusova A (2011) А comparison of the three methods of estimation of weighted average cost of capital and equity cost of company. Financ Anal Prob Solut 34(76):36–42Google Scholar
- Filatova Т, Orehova N, Brusova А (2008) Weighted average cost of capital in the theory of Modigliani–Miller, modified for a finite life-time company. Bull FU 48:68–77Google Scholar
- Modigliani F, Miller M (1966) Some estimates of the cost of capital to the electric utility industry 1954–1957. Am Econ Rev 56:333–391Google Scholar
- Modigliani F, Мiller M (1958) The cost of capital, corporate finance, and the theory of investment. Am Econ Rev 48:261–297Google Scholar
- Modigliani F, Мiller M (1963) Corporate income taxes and the cost of capital: a correction. Am Econ Rev 53:147–175Google Scholar
- Myers S (2001) Capital structure. J Econ Perspect 15(2):81–102CrossRefGoogle Scholar

## Copyright information

© Springer Nature Switzerland AG 2018