TRANSFORMATION OF CAPITAL STRUCTURE THEORY IN THE DIGITAL ECONOMY
Abstract
The article examines the evolution and transformation of capital structure theory in the context of the formation of the digital economy. The aim of the study is to synthesize classical and contemporary approaches to corporate capital structure, assess the impact of digitalization, financial technologies, and new institutional conditions on firms’ financial decisions, elucidate the mechanisms of transformation of the core principles of capital structure theories, and identify the key mechanisms, tools, and factors that determine the directions and features of their development and adaptation to modern business conditions. The research employs methods of theoretical generalization, comparative analysis, systematization of scholarly approaches, and interdisciplinary analysis. The paper reviews the key propositions of classical capital structure theories, including the Modigliani–Miller irrelevance theory, trade-off theory, pecking order theory, and agency theory, and substantiates their limitations under conditions of economic digital transformation. It is demonstrated that digital platforms, the development of fintech, the growing role of intangible assets, big data, artificial intelligence, and declining transaction costs are reshaping traditional views on optimal leverage and the cost of capital. Special attention is paid to the impact of digitalization on access to finance, information asymmetry, and risk management, as well as to the emergence of new forms of capital, including tokenized assets, alternative finance, and embedded finance. The study substantiates the need to move from static capital structure models toward dynamic, behavioral, and resilience-based approaches that account for the volatility of the digital environment and the growing importance of cyber and systemic risks. A conceptual framework for the transformation of capital structure theory in the digital economy is proposed, emphasizing financial flexibility, resilience, and the integration of digital instruments. The practical significance of the findings lies in their applicability for financial managers and analysts in substantiating capital structure decisions in a digital environment.
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Myers, S. C., Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics. Vol. 13, No. 2. P. 187–221.
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Stewart, T. A. (1997). Intellectual Capital: The New Wealth of Organizations. New York : Doubleday, 328 p.
Chen, Y., Shen, L., Bian, Y., Zhang, X. (2023). Effects of digital transformation on dynamic capital structure adjustment: evidence from China. Systems. Vol. 11, No. 7. Article 330. DOI: 10.3390/systems11070330 (accessed May 28, 2025).
Niu, Y., Wang, S., Wen, W., Li, S. (2023). Does digital transformation speed up dynamic capital structure adjustment? Evidence from China. Pacific Basin Finance Journal. Vol. 79. Article 102299. DOI: 10.1016/j.pacfin.2023.102299 (accessed May 28, 2025).
Li, J., Li, Z. (2025). Mechanisms of corporate digital transformation on asymmetric capital structure adjustment– в the mediating role of information asymmetry and financial stability. Heliyon. Vol. 11. No. 3: e41745. DOI: 10.1016/j.heliyon.2025.e41745 (accessed November 28, 2025).
Xue, Y., Zhang, X. (2024). Digital transformation and corporate capital structure: Evidence from China. Pacific Basin Finance Journal. Vol. 84:102299. DOI: 10.1016/j.pacfin.2024.102299 (accessed November 28, 2025).
Ktit, M. A., Abu Khalaf, B. (2025). Does digital transformation reflect the adjustment of capital structure? Journal of Risk and Financial Management (MDPI). Vol. 18. No. 4:168. DOI: 10.3390/jrfm18040168 (accessed November 30, 2025).
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management. Vol. 17, No. 1. P. 99–120.
Friede, G., Busch, T., Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment. Vol. 5, No. 4. P. 210–233. DOI: 10.1080/20430795.2015.1118917 (accessed November 30, 2025).
Minsky, H. P. (1986). Stabilizing an Unstable Economy. New Haven ; London: Yale University Press, 296 p
Schwab, K. (2016). The Fourth Industrial Revolution. Geneva : World Economic Forum, 172 p.
Goldfarb, A., Tucker, C. (2019). Digital Economics. Journal of Economic Literature. vol. 57, issue 1, p. 3–43.
Easley, D., O’Hara, M. (2004). Information and the Cost of Capital. The Journal of Finance. Vol. 59. No. 4. p. 1553–1583. URL : https://doi.org/10.1111/j.1540-6261.2004.00672.x (accessed November 30, 2025).
Wu, J., Yang, K., Song, F. (2025). Reconfiguring Capital Structures Through Digital R&D: Mechanisms and Empirical Insights. International Review of Economics & Finance. Vol. 104(C). DOI: 10.1016/j.iref.2025.104610 (accessed November 27, 2025).
Nahapiet, J., Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review. Vol. 23. No. 2. P. 242–266. DOI: 10.5465/amr.1998.533225 (accessed November 27, 2025).
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