engleski

Behavioral elements in capital structure management

The issue of determination, or even the mere existence, of optimal capital structure is for a long time the subject of interest for the scientists and financial managers. Significance of appropriate capital structure combination is reflected on capital costs decrease and lower costs of financing which is a consequence of lowered company’s risk perception. The fact that there are several different theories about capital structure formation speaks clearly about their importance for financial management of every company. Each of those theories tries to come to the conclusion about possibility of optimal capital structure reach, and all of them have the goal of shares value maximization. On the other hand, behavioral finance questions the validity of traditional assumptions of rational participants in the capital market and the efficiency of capital market. Through the foundations of behavioral finance, ie. cognitive psychology (how people think) and the limits to arbitrage (when capital markets are inefficient), this paper seeks to identify the elements that influence the determination of capital structure in contemporary conditions. By presenting a number of previous studies, there are particularly examined the elements of behavioral finance with the influence on shares mispricing, consequently the formation of capital structure, and the irrational elements in the process of capital budgeting.

Behavioral elements; capital structure; capital budgeting

nije evidentirano