Funding decisions

Funding decision is one of the financial strategic decisions of a corporation. There are also two other financialstrategic decisions that a corporation faces, the investment and the dividend decision. This paper describesbriefly the investment and the dividend decision, although its main focus is on funding decision. In describingthe funding decision the researchers will first explain the sources of funding in a corporation. Then, as fundingdecision is involved with determining the appropriate combination of the funding sources (debt, preferredstock, common stock, retained earnings), they will discuss about the debt equity ratio in different industries.After that they will describe the size and timing of corporate bond flotation and then they will present onemodel for corporate funding decision. Finally concentrating on the external sources of funding, they will discussthe funding decision in the perspective of determining optimal capital structure and will explain a mathematicalprogramming model which can be used for determining the optimal capital structur