Dynamics of Corporate Capital Structure Choices: Further Reconciliations and Tests

In the Literature of Corporate Finance, an inclusive theory unifying the modern capital structure theories is pending as yet. A comprehensive theory considers "time-state-focus" choices over time. Firms' comprehensive capital structure choices need some reconciliation of their different tracks of financing. On reconciliation of the choices in the static trade-off (STO) track, the pecking order (PO) track, and the dynamic trade-off (DTO) track at presence of upper and lower recapitalization boundaries, and the limits of adjustment costs, we theoretically extend the 2nd proposition of Sinha and Ghosh (2012) (read with Sinha and Ghosh, 2013a) with three innovative corollaries. The empirical observations with reference to a large sample of Indian non-banking firms' financing data over 10 years' study period of 1997-98 to 2006-07 show unique findings in support of the corollaries.