THEORY OF CAPITAL STRUCTURE AND ITS IMPACT ON INVESTMENT DECISIONS AND FINANCING

The purpose of this research was to study some theories about capital structure, using as a references the article published by Modigliani and Miller in 1958, which intended to probe that the cost of capital does not depend on the level of debt of an organization. The authors based their statement in the supposed existence of a perfect market, the rational conduct of investors and on the fact that there is no reason for not admitting that two identical enterprises with the same payroll, benefits and risks, should have the same total market value, even if they differ in their level of debt. Therefore, the control that investors have on their personal debt is enough to keep the level of debt from affecting value. By studying the taxes over benefits and assuming that the interest rate demanded from the borrowers is the same for both, natural and juridical persons, the possible differences between the prices of shares of both organizations are rapidly eliminated by means of a process of arbitration. On the margin of theoretical discussions, if admitted that interest rates demanded by investors grow from a certain level of debt, there will be always a practical limit for degree of debt, since it would be inconceivable that an enterprise would be rationally favorable to issuing debt instead of shares, when marginal rates of these liabilities is superior to the performance demanded by the shareholders, increasing the financial tension.