Hostname: page-component-76fb5796d-25wd4 Total loading time: 0 Render date: 2024-04-25T13:58:28.968Z Has data issue: false hasContentIssue false
  • English
  • Français

A Note on Optimal Equity Financing of the Corporation

Published online by Cambridge University Press:  19 October 2009

Stylianos Perrakis
Get access Rights & Permissions [Opens in a new window]

Extract

In a recent article in this journal [6], Clement G. Krouse and Wayne Y. Lee (hereafter K-L) presented a model of optimal equity financing of a corporation based on Pontryagin's maximum principle. In this note the basic assumption of a constant internal rate of return of the K-L model is relaxed. As a result, the financial implications of the K-L results remain essentially unchanged, but their applicability is extended considerably, and some undesirable solution characteristics are eliminated.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 11 , Issue 1 , March 1976 , pp. 157 - 164
Copyright
Copyright © School of Business Administration, University of Washington 1976

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

University of Ottawa. The author wishes to thank Aharon G. Beged-Dov and a referee of this journal for helpful advice and comment.

References

REFERENCES

[1] Arrow, K. J. “Applications of Control Theory to Economic Growth.” Lectures in Applied Mathematics, Vol. 12, Part 2 (1968).Google Scholar
[2] Bryson, A. E., and Ho, Y. C.. Applied Optimal Control. Waltham, Mass.: Blaisdell (1969).Google Scholar
[3] Fama, E., and Miller, M.. The Theory of Finance. New York: Holt, Rinehart and Winston (1972).Google Scholar
[4] Haley, C. W., and Schall, L. D.. The Theory of Financial Decisions. New York: McGraw-Hill (1973).Google Scholar
[5] Hestenes, M. R. “On Variational Theory and Optimal Control Theory.” Journal SIAM Control, Series A, III (No. 1, 1966), pp. 23–48.Google Scholar
[6] Krouse, C. G., and Lee, W. Y.. “Optimal Equity Financing of the Corporation.” Journal of Financial and Quantitative Analysis, Vol. 8, No. 4 (September 1973), pp. 539–564.CrossRefGoogle Scholar
[7] Lerner, E., and Carleton, W.. A Theory of Financial Analysis. New York: Harcourt Brace and World (1966).Google Scholar
[8] Perrakis, S. “Certainty Equivalents and Timing Uncertainty.” Journal of Financial and Quantitative Analysis, Vol. 10, No. 2 (March 1975).CrossRefGoogle Scholar