Capital Structure And Corporate Strategy Essay

The question of the relation between capital structure and corporate strategy was discussed a lot in the recent years since Modigliani and Miller’s (1958) paper, but the scientists did not study the question of the capital structure, corporate strategy and expansion. Investors used to adopt different strategies to match with competences and investment objectives, knowledge of how investors towards the country affect their strategies, for example the choice of the different expansion modes to entry new market and subsequent performance can affect the performance of the company. In addition we can find the lack of consensus on which are the determinants of capital structure. Since that time the scholars contributed into the studies that proves

In my thesis assignment I would like to discover the question of the relation between the corporate strategy and the capital structure of the French companies that expand their activities to the Eastern Europe. This topic represents a lot of controversial ideas between scholars and businesses. The decision of the capital structure and its effect on firm’s creation of value is the main

Today, the question of the diversification strategy (Barton and Gordon, 1988; Chatterjee and Wernefelt 1991; Lowe et al., 1994; Taylor and Lowe, 1995; Kochhar and Hitt, 1998), the specificity of assets (Williamson, 1988; Balakrishnan and Fox, 1993; VIncente-Lorente, 2001), the innovation strategy (O’Brien, 2003), and the environmental dynamism (Simerly and Li, 2000) remains the most studied. However, the relation between capital structure and corporate strategy of the companies that expand their activities were not studied at all. In this paper, I will pay my attention on the question of capital structure financing the corporate expansion strategy.

Company reaches it success by applying strategies that underline its unique core competencies or that build on its dominant logic. The firm’s financial decision about how to mix the debt and equity represents the main issue that face the financial managers of the company. The financial researchers Modigliani and Miller were the first theorists who posed the question of the relevance of the capital structure for a company. After them, the researchers in both strategic management and finance started to examine the question of the relationship between firm strategy and its capital