When we observe the capital structure of many firms, we find that they tend to utilize lower

Question:

When we observe the of many firms, we find that they tend to utilize lower levels of debt than that predicted by the trade-off theory. Offer an explanation for this.

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...