| Author: | Simon, D. |
| Title: | An empirical reconciliation of the Miller model and the generalized capital structure models |
| Journal: | Journal of Banking and Finance
1996 : JAN, VOL. 20:1, p. 41-56 |
| Index terms: | FINANCE CAPITAL STRUCTURE OF COMPANIES COSTS |
| Language: | eng |
| Abstract: | This paper uses time series techniques to demonstrate the compatibility of Miller's capital structure model (Miller ,M.H.,1977) with generalized capital structure models from 1970 through 1985. The Miller model represents a long-run equilibrium because deviations from the Miller equilibrium revert toward a mean close to zero, while transitory shocks to the leverage-related cost of debt and bank borrowing costs explain short-run deviations from the Miller equilibrium. The typical levels of leverage related costs of debt and bank borrowing costs over the sample period do not cause deviations from the Miller equilibrium. |
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