Choosing Capital Structure in an Enterprise

Tyumen State University Herald. Social, Economic, and Law Research


2017, Vol. 3. №3

Choosing Capital Structure in an Enterprise

For citation: Khrapko V. N. 2017. “Choosing Capital Structure in an Enterprise”. Tyumen State University Herald. Social, Economic, and Law Research, vol. 3, no 3, pp. 193-206. DOI: 10.21684/2411-7897-2017-3-3-193-206

About the author:

Vladimir N. Khrapko, Cand. Sci. (Biol.), Associate Professor, Department of Management, Institute of Economics and Management, V. I. Vernadsky Crimean Federal University (Simferopol);


The problem of explaining the structure of the enterprise capital from the theoretical positions remains relevant. This problem is discussed in many papers on the theory of corporate finance. Taking into account that the stock market in Russia is not of first-grade importance, the emphasis is made on private (non-public) enterprises.

The novelty of the work is the development of a theoretical framework to determine the structure of the enterprise’s capital. This article uses a microeconomic approach, which allowed to develop Miller-Modigliani and trade-off theories, and also created a theoretic optimization model for decision-making on the amount of debt using profit maximization, in contrast with papers that often focus on empirical research using regression analysis methods.

The purpose of this study is to develop a theoretical model of decision-making on the capital structure based on the approach adopted in microeconomics, and the selection of model parameters, using data on Russia.

The main method of research in the work is the method of optimizing the profit of the enterprise. The methodology of the conducted research consists in forming the target function of the enterprise taking into account the most important determinants influencing the capital structure. As a result of the conducted research it was shown that in some cases it is more profitable for an enterprise to choose financing from its own funds. This conclusion corresponds to the recommendation of the pecking order theory.

If the objective function formation uses additional types of costs such as the probable costs in the default event, the loan rate, the tax burden level, and similar, then profit maximization by changing the debt amount makes it possible to obtain a debt share in the capital, optimal from this point of view.

Conclusion: the proposed model (taking into account the individual risks of the enterprise) can be used to obtain the optimal level of the debt of the enterprise.


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