Capital Structure of Public Limited Companies Dissertation

Capital Structure of Public Limited Companies - Dissertation Example Table of Content Chapter 1: Introduction 5 Motivation 5 Aims and Objectives 5 Significance of the study 6 Research Questions 7 Research method and data 8 Research Structure 8 Chapter 2: Literature review 9 Global Financial Market 9 History 9 Evaluation of UK capital market 12 Causes of current financial crisis 13 Capital market 15 Source of finance 15 Current capital structure of FTSE 100 companies 16 Advantages and disadvantages of high leverage 19 Theories of capital market structure 20 Chapter 3: Methodology and data analysis 26 36 Chapter 4: Research Findings 36 Impact of Capital Structure on Agency Costs 36 Impact of recent global financial crisis on the capital structure of UK companies 37 Chapter 5: Conclusion 39 Reference 42 Bibliography 47 Financial times. European debt crisis shakes markets again. May 23, 2011. Retrieved from: http://www.kyivpost.com/content/business/european-debt-crisis-shakes-markets-again-105100.html 48 Chapter 1: Introduction Motivation Capital structur e of firms is developed based on many internal and external factors which have substantial influence on it. Financial Crisis or Liquidity Crisis in 2007 in global financial market has had a major impact on the firms’ financial status across the world. ... Financial crisis leads to dr4amatiacally decrease in stock price of the firms. So, equity structure of the firms also changed during this recession period. Capital structure is the major part of overall financial structure and policies of firms. Companies develop financial structure and policies based on major external financial condition of the market where they operate business. Though there is many empirical studies and research on capital structures but it hard to assess the impact of financial crisis on it. Therefore, it this study, capital structure theories and empirical studies are analysed to assess the extent of impact of financial crisis on capital structure and reason for the impact. Aims and Objectives The primary aim of the study is to evaluate the capital structure of firms in the UK before the global economic crisis in the years around 2007 and after the financial crisis in the years 2011 or 2012. In order to achieve the above mentioned aim of the study, the following objectives have been considered: Review theories on capital structure in order to determine how it might change during a period of prolonged recession and liquidity crisis. Compare and contrast the capital structure of public UK companies in 2007 and in 2011/2012.Evaluate the extent to which any changes in capital structure are due to the ongoing global crisis. Aim of this paper is a detailed evaluation of the capital structure of firms in United Kingdom. Capital structure of the firms in before financial crisis will be compared with current revised capital structures of the firms. For this purpose, reasons for financial crisis need to be analysed along with history of it to assess its impact in earlier. Theoretically aim of the paper is to