Analysis of the Financial Structure Influence on the Cost of Capital in Multinational Companies

• Main Author: Nicoleta BARBUTA-MISU
• Format: Article
• Language: English
• Published: Dunarea de Jos University of Galati 2012-11-01
• Series: Risk in Contemporary Economy
• Subjects: capital structure; leverage; multinational corporations; weighted average cost of capital; taxation
• Online Access: http://www.rce.feaa.ugal.ro/sites/default/files/Misu.pdf

The main problems identified in determination of financial structure are referred to identifying the source of relevant funds, evaluation of risks generated by using some funds and their costs in order to ensure the autonomy of the enterprise. The objective of any company is to achieve optimal capital structure, which is approached by minimizing costs of capital employed and maximizing the market value of the company. Thus, this paper aims to study the influence of financial structure on the cost of capital in the case of two multinational companies, in order to identify optimal financial structure, and the differences between them.