LEASING, CAPITAL STRUCTURE AND DEBT DISPLACEMENT
LEASING, CAPITAL STRUCTURE AND DEBT DISPLACEMENT

Summary/Abstract: Brealy and Young (1980, p. 1249) remind us: “…the use of any lease valuation model involves a general theory of capital structure”. If a user purchase an asset with a given combination of cash and borrowing, there is a clear impact on corporate capital. The impact is not so clear if the user leases the asset. A brief review of the evolution of theories on corporate capital structure – presented by Myers (1984) will assist in our discussion of how leasing analysis “involves a general theory of capital structure”.

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