RETROSPECTIVE ANALYSIS OF MNE CAPITAL STRUCTURE SCIENTIFIC CONCEPT

Abstract

Abstract. The existing MNE capital structure theories comparative retrospective analysis is
carried out. Nine of such existing theories are discovered: net operating income approach, net
income approach, Miller-Modigliani theory, traditional approach, trade-off theory, agency theory,
signaling theory, pecking order theory and corporate control theory. Their common and
peculiar features are justified. General and specific capital structure theories are defined. The
grouping of theories according to their content base is carried out. The multi criteria classification
of capital structure theories is elaborated. The three of four criteria under this classification
are suggested by the author for the first time. By the similarity of its notional basis the
following theories are considered: theories based on net operating income approach, theories
based on net income approach, dynamic theories and a trade-off theory which is not attributed
to any certain theories group under this classification criterion. By the research subject theories
are divided into endogenous and exogenous and by the research object they are classified
as general and specific ones.
The Miller-Modigliani theory is proved to be considered under several groups of theories
since its different parts differ substantially. The basic version of the theory that does not consider
corporate and personal taxes is attributed to static theories. The second part that considers corporate
taxes is also regarded as static one but its third part considering corporate and personal
taxes has a different research subject. It explores the influence of shareholders and creditors
personal taxes on capital structure. Thus, it is a dynamic theory.
The author’s definition of the corporate capital structure is suggested on the basis of the conducted
analysis. It represents the system of economic relations that appear and develop while
corporations attract and utilize financial resources and also promote the optimal interrelation
between equity and debt. These relations also include a complex of respective financial, managerial
and other activities that assure the mentioned optimization.
Key words: MNE capital structure, corporate capital structure theories, Miller-Modigliani
theory, equity financing, debt financing, static capital structure theories, dynamic capital structure
theories.