The main elements of the theoretical argument can be found in SolomonEzra, The Theory of Financial Management (New York: Columbia Univ. Press, 1963). An excellent managerial approach to the same problem can be found in DonaldsonGordon, “New Framework for Corporate Debt Policy,”Harvard Business Review, XL:2 (March-April 1962).
2.
SchwartzEliAronsonJ. Richard, “Optimal Financial Structure,”Journal of Finance, March 1967, pp. 10–18. The authors found similarity in the financial structures of firms classified into very broad industry groups. The results might not have been the same for narrower groups, because it is becoming increasingly difficult to classify companies into a single industry.
3.
Proof of this hypothesis is difficult to find because separate balance sheets for foreign subsidiaries are not available either in annual reports prepared for stockholders or those submitted to the SEC.
4.
Donaldson, “New Framework for Corporate Debt Policy.”
