ABSTRACT
Companies raise finance to undertake economic activities in a variety of ways. Some depend heavily on bank loans, while others use their own stores of funds, amassed from retained earnings, with little recourse to outside earnings. Although economic theory may try to develop a general explanation of how firms will finance themselves (or, as in Modigliani–Miller, argue that financial structure is irrelevant, so that there will be no presumption of a systematic pattern in company financing structures), data show that there are a variety of patterns for company finance, and that patterns vary over time and place. However, some systematic patterns can be discerned.
