Name: Himanshu Sharma, Aloukik Verma, Prashant Pushkar
Country: India

Year: 2023
Volume: Volume-10, Issue-2 (July-December)
Page Number: 99-110

This study provides a contextual reappraisal of capital structure theories within the
framework of imperfect markets, where real-world frictions such as information asymmetry, agency conflicts, institutional inefficiencies, and macroeconomic volatility significantly influence corporate financing decisions. Moving beyond the assumptions of perfect markets, the paper integrates insights from trade-off theory, pecking order theory, and agency theory with emerging perspectives on financialization, behavioral finance, and institutional dynamics. Using a systematic literature review approach, the study synthesizes recent empirical and theoretical contributions to highlight how capital structure decisions vary across developed and emerging economies. The findings suggest that while traditional theories retain their relevance, their applicability is contingent upon contextual factors such as governance quality, financial market development, and economic conditions. Additionally, the study emphasizes the growing importance of behavioral biases and sustainability considerations in shaping financing choices. Overall, the research advocates for a holistic and multidisciplinary approach to understanding capital structure, offering valuable implications
for academics, policymakers, and corporate managers operating in increasingly complex financial environments.