&gt; One Nobel winning economic theory leads to an optimal capital structure of 100% debt<p>Too bad the theory is complete nonsense.<p>&gt;&gt; <i>The basic theorem states that under a certain market price process (the classical random walk), in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed.</i><p>In short, the theorem states that in conditions that <i>will never exist in the real world</i>, the value of a firm is unaffected by how it&#x27;s financed.<p>&gt;&gt; <i>the value of the company increases in proportion to the amount of debt used</i><p>First they say <i>&quot;the value of a firm is unaffected by how it&#x27;s financed&quot;</i>, but then: <i>&quot;the value of the company increases in proportion to the amount of debt used&quot;</i>, so if &quot;debt used&quot; counts as &quot;financing&quot; then the theory contradicts itself, at least as described by Wikipedia.<p>This is where I rambled about some other related stuff, but decided to just leave it out because fuck everything about mainstream economics.