The managerial implications of capital structure theory include all except which of the following?
A) Capital structure changes transmit important information to investors.
B) Changes in capital structure result in changes in the market value of the firm's equity.
C) Optimal capital structure is influenced heavily by the business risk facing the firm.
D) Tax shield benefits from equity lead to increased firm value.

Question

Quizplus · Accepted Answer

The option D is incorrect because tax shield benefits from debt not equity lead to increased firm value. The other options are valid managerial implications of capital structure theory.

The Managerial Implications of Capital Structure Theory Include All Except