Corporate Finance. Huge Problem.

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Description

The main objective of existence of an organization is to increase its performance.  This is mainly associated to the strategic decisions that are taken by a firm. In the running of the organization managers are required to make different strategic decision that has far reaching consequences on different stakeholders.  As stakeholders, managers are obliged to observe the best corporate governance principles, especially when it comes to matters that affect more than one stakeholders.[1] One of such issues is having an optimum capital structure of the organization and one of the most important decisions that have to be taken by a firm regarding meeting its financial requirements. For every management, one of the hardest strategic management issues pertain to the capital structure which is usually liability of a firm, particularly considering the balanced inclusion of different sources of organizational financing.

[1] Piotroski, J.D, & Roulstone, D.T, The Influence of Analysts, Institutional Investors and Insiders on the Incorporation of Market, Industry and Firm-Specific Information into Stock Prices (2003)