The use of Merton model for the optimal capital structure: a theoretical and empirical analysis

Abstract

This thesis is focused on how managing the capital structure components in order to minimize the costs of financial distress and maximize the overall firm value. After the presentation of the main theories about the capital structure that have been developed over the years, with a particular focus on the Trade-Off Theory, and the dissertation about the costs of financial distress, the core of this work concerns the use of the Merton model for credit risk to estimate the optimal capital structure, under the classic Trade-Off Theory, in a sample of ten industrial firms.