Property Rights and Corporate Finance
Abstract
We examine a central result in corporate finance – the Modigliani-Miller capital structure irrelevance proposition – from a Coasian property rights perspective. Building upon the work of Coase, Demsetz and Cheung, we develop an enabling
methodology to study the impact of positive Coasian transaction costs. When the
Modigliani-Miller assumption of default-free debt is relaxed in the analysis of corporate leverage, either long-lived transaction costs related to property rights must be explicitly assumed away, or long-lived transaction costs related to property rights
must be incorporated into the analysis.
University
Göteborg University. School of Business, Economics and Law
Collections
View/ Open
Date
2005Author
Kairys, Jr., Joseph P.
Graff, Richard A.
Keywords
property rights; transaction costs; capital structure
Publication type
Report
ISSN
1403-2465
Series/Report no.
Working Papers in Economics, nr 174
Language
en