Kairys, Jr., Joseph P.Graff, Richard A.2005-08-232007-02-092007-02-0920051403-2465http://hdl.handle.net/2077/2745We 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.33 pages150148 bytesapplication/pdfenproperty rights; transaction costs; capital structureReportEconomics