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1-According to M and M proposition 1 and 2, discuss the factors that will influence...

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Finance

1-According to M and M proposition 1 and 2, discuss the factors that will influence the capital structure of a public listed company.

- Reduce conflict between manager and shareholder, so can reduce agency cost.

- Asynmetric information between issuer and merchant bank

-M and M admit that with corporate tax, Tax saving due of increase debt.

- Finance Distress cost, occus when promises are broken as result of having too much debt.

- Transaction cost in arbitrage proses.

2- Why timing, current gearing ratio and dilution of share are important when we do financing. (300words)

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