1 Use of Debt Finance
　　The trade-off theory of capital structure refers to the idea that a company chooses how much debt finance to use by balancing the relative costs and benefits of debt.
　　The relevant benefit of debt is the tax shield on interest payments.
　　The relative costs of using debt include:
　　Agency costs—as financial gearing rises, debt contracts include increasingly restrictive covenants (e.g. forcing the firm to stay in low-risk projects or limiting dividend payments). The resulting loss in potential shareholder wealth is referred to as agency costs.
　　Financial distress costs—when stakeholders perceive the level of gearing to be dangerous the firm's cost of operating the business may rise as suppliers refuse credit, staff leave, potential customers lose faith in products sold under warranty or guarantee, etc.
　　Bankruptcy costs—if a firm defaults on its debt it will either incur the costs of going through a capital reconstruction scheme or the costs of being liquidated.
　　2 Comparison With MM and Pecking Order Theory
　　MM only considered the benefit of using debt (and hence concluded that the firm's value would continuously rise with financial gearing). The static trade-off theory also considers the costs and attempts to explain why, in practice, firms use less debt than expected by MM.
　　The pecking order theory does not suggest that there is an optimal debt-to-equity ratio. However, static trade-off theory suggests that there is an optimal point at which the marginal cost of taking on more debt equals the marginal benefit.
　　3 Conclusion
　　The conclusion of static trade-off theory is, therefore, that an optimal capital structure does exist and the related cost of capital and valuation graphs would be similar to that of the traditional view. However, the optimal debt-to-equity ratio suggested by static trade-off theory would not necessarily be exactly the same as that of the traditional view of capital structure.
　　各位考生想順利通過ACCA考試，除了掌握專業(yè)知識和答題技巧之外，還可以關(guān)注高頓網(wǎng)校的精品網(wǎng)課，高頓網(wǎng)校專業(yè)講師為考生們提供考試復(fù)習(xí)筆記匯總，幫助考生更好地理解會計(jì)從業(yè)知識，高頓祝各位考生考試大捷！進(jìn)入直播>>