ACF Week 7 Capital Structure Plan for today Capital Structure Understanding Modigliani-Miller The trade-off theory of capital structure The pecking order theory Empirical facts about capital structure How to prepare for this lecture: Textbook material Limits to the Use of Debt (RWJR Chapter 17) Required reading: Online Graham, J R, and C Harvey, 2002, How Do CFOs Make Capital Budgeting and Capital Structure Decisions? Journal of Applied Corporate Finance, 15.1, 8-23. Optional reading Opler, T C, M Saron, and S Titman, 1997, Designing Capital Structure to Create Shareholder Value, Journal of Applied Corporate Finance, 10.1, pp. 21-32. Next time Credit risk and long-term financing