Capital Structure Decision With Zero Taxes

  • Harold BiermanJr.


While the assumption of zero corporate taxes is not realistic for the normal business entity, the assumption enables us to accomplish one very important objective. It establishes that without taxes the capital structure choice is not an important decision. It becomes important when we recognize the presence of significant corporate income taxes.


Capital Structure Corporate Taxis Financial Distress Common Stock Vertical Slice 
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  1. Modigliani, F. and M.H. Miller, “The Cost of Capital, Corporation Finance, and The Theory of Investment,” The American Economic Review, June 1958, pp. 261–297.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2003

Authors and Affiliations

  • Harold BiermanJr.
    • 1
  1. 1.The Johnson Graduate School of ManagementCornell UniversityIthacaUSA

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