Chemotherapy is a cancer treatment where medicine is used to kill cancer cells. There are many different types of chemotherapy medicine, but they all work in a similar way. They stop cancer cells reproducing, which prevents them from growing and spreading in the body.

1. The capital structure puzzle refers to the observation that the leverage ratio of firms does not
seem to change much over time, even with changes in the financial market and cost of debt
capital (Myers, 1984). This puzzle has been a topic of interest for many researchers and has been
explained through various theories such as the presence of information asymmetry, agency costs,
and transaction costs (Myers, 1984).
One of the related studies to the capital structure puzzle is the article by Desai and Dittmar
(2017), who explored the role of tax benefits in the capital structure decisions of firms. The
authors found that firms with higher tax benefits tend to have a higher debt-to-equity ratio. This
result supports the agency cost theory, as tax benefits can act as an incentive for managers to take
on more debt financing, as the interest paid on debt is tax deductible.
Another related study is by Kim and Li (2018), who investigated the impact of corporate
governance on the capital structure of firms. The authors found that firms with strong corporate
governance tend to have a lower debt-to-equity ratio, as the presence of an independent board of
directors and effective monitoring mechanisms reduce the agency costs associated with debt
financing.
A third related study is by Fama and French (2017), who investigated the capital structure of
firms in the US. The authors found that the debt-to-equity ratio of firms is positively correlated
with firm size and profitability, and negatively correlated with firm growth and market-to-book
ratios. These findings suggest that the capital structure puzzle can be partially explained by firm
characteristics, such as size, profitability, growth, and market-to-book ratios.
In conclusion, the capital structure puzzle remains an active area of research, with various
theories and studies attempting to explain the observed phenomenon. Desai and Dittmar (2017)

2. found that tax benefits play a role in the capital structure decisions of firms, while Kim and Li
(2018) found that corporate governance has an impact on the capital structure of firms. Fama and
French (2017) found that firm characteristics, such as size, profitability, growth, and market-to-
book ratios, play a role in explaining the capital structure puzzle.
References: Desai, M. A., & Dittmar, A. K. (2017). Corporate tax avoidance and firm leverage.
The Journal of Financial Economics, 124(3), 580-598.
Fama, E. F., & French, K. R. (2017). Dissecting Anomalies. The Journal of Finance, 72(1), 1-64.
Kim, J. B., & Li, X. (2018). Corporate governance and capital structure: Evidence from China.
Journal of Corporate Finance, 47, 132-149.
Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance, 39(3), 575-592.