Graham, Leary & Roberts (2015) explore the changing dynamics of capital structure in United
States firms during the 20th century.
Discuss how this changing capital structure could be explained by key capital structure theories i.e.
MM Proposition and Pecking Order Theory.
Key Readings (Minimum)
Graham, JR, Leary, MT & Roberts, MR 2015, ‘A century of capital structure: The leveraging of
corporate America’, Journal of Financial Economics, vol. 118, no. 3, pp. 658–683.
Myers, SC 1984, ‘The Capital Structure Puzzle’, The Journal of Finance, vol. 39, no. 3, pp. 574–
592.
Brealey, R, Myers, S & Allen, F 2016, Principles of Corporate Finance., McGraw-Hill College.
—> chapters on capital structure (i.e debt and equity policy)
Format
2,000 Word Essay
Marking Overview
Critical Analysis (70 Marks):
1. Synopsis and introduction (5 marks)
2. Main Body (65 Marks)
a. Overview of key findings of Graham, Leary & Roberts (2015).
b. Discussion of MM Propositions and Pecking Order theory.
c. Critically analysis of key capital structure theories in relation to Graham, Leary & Roberts
(2015) findings at a cross section and over time.
d. Exploration of alternative capital structure theories.
General Report Quality (20 Marks)
a) Critical reasoning to support claims (5 marks)
b) Quality and logical explanation of arguments (5 marks)
c) Clear structure and coherent expression (5 marks)
d) Evidence of good research on academic literature and understanding of real world
constrains on theoretical predictions (5 marks)
Presentation and References (10 marks)
a. Professional presentation (5 marks)
b. References are presented as required (5 marks)
Penalties
a. Exceed word limit (10% per extra 200 words)
b. Late submission (10% per calendar day)
Mandatory Requirements
1. A synopsis and introduction of no more than 100 words is to preface the main report.
2. The essay should have a normal margin (i.e. 2.54cm margin space for top, bottom and
sides), font in Times New Roman and font size of 12, and 1.5 line spacing. A 10% penalty
applies for violation of the above presentation requirement.
3. You should NOT use any standard cover sheet in the final version of the assignment you
submit. The cover page of your report should only contain the article title and the name and
full student ID. Failure to do so will result in a 10% penalty and delay in the assessment
process of your report.
Additional guidelines
1. The task is an essay, not a series of extended responses, it must have an introduction, a body
and a conclusion. This means it will discuss and argue in a certain direction not just be a
knowledge dump of the readings.
2. Do your readings before you begin the essay as you will need an understanding of the key
capital structure theories and the empirical findings on capital structure in the 20th century.
3. Plan your arguments in advance of writing, a good structure will make your arguments more
coherent and add a logical flow.
4. 2,000 word limit does not include references or appendices.
5. With respect to referencing you can either follow the APA guide, or use the Harvard method with
the format as used in the Journal of Finance. If you do not have a referencing software already try
Mendeley.
Plagiarism
The TurnItIn system will be used to automatically detect any copies from previous articles,
including academic literature, journal and newspaper releases, previous assignments (including
your own assignments that you submitted in previous courses), etc., around the world
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