Abstract
Within the Anglo-Saxon economies, there is a theory and practice of capital gearing which rationalises the reality and sometimes ensures, through banking prudence, that the percentage of debt in the capital structure of most companies does not exceed about 30% of total capital employed. Both the theory and the practice of capital gearing are subjects which deserve to be dealt with in some detail.
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Notes
For a fuller exposition of the arguments, see A. J. Merrett and Allen Sykes, The Finance and Analysis of Capital Projects, Longman, 1963, Chapter 15, Optimal Financing, pp. 393–422.
H. Kahn, The Emerging Japanese Superstate, Prentice-Hall International, London, 1971, p. 106.
F. Modigliani and M. H. Miller, ‘The cost of capital, corporation finance, and the theory of investment’, American Economic Review, June 1958.
Robin B. Fox, ‘Leverage in U.K. companies 1967–73—An empirical investigation’, Management Decision, 1977, Vol. 1.
A. Glyn and B. Sutcliffe, British Capitalism, Workers and the Profits Squeeze, Penguin Books, 1972.
James C. Abegglan, Business Strategies for Japan, Sophia University, Tokyo, 1970, pp. 58–68.
Kenneth K. Kurihara, The Growth Potential of the Japanese Economy, The Johns Hopkins Press, Baltimore, 1971, p. 77.
See also O. Shimomura, ‘Basic Problems of Growth Policy’, Economic Studies Quarterly, Mar. 1961.
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© 1979 J. C. Carrington and G. T. Edwards
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Carrington, J.C., Edwards, G.T. (1979). The Costs and Profits of Capital. In: Financing Industrial Investment. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-04021-6_5
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DOI: https://doi.org/10.1007/978-1-349-04021-6_5
Publisher Name: Palgrave Macmillan, London
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