The entity-firm approach calls for a dramatic change in business finance theory. In order to offer some insights about such a revolution, the chapter addresses some fundamental criticisms against NFT, and focuses its attention on methodological individualism which has abstracted away any idea of firm different from a mere nexus of contracts or shareholders claims. The advocated centrality of the entity-firm concept, instead, appeals for a business finance theory based upon the preserving of firm continuity. Such a different keystone gives different meaning to financial slacks, to values and risk, and finally to capital structure foundation and evolution. This latter topic is developed throughout the chapter in a dynamic and complex context where bounded rationality and ignorance of the future impose a continuing rebalancing of debt/equity and temporary/permanent financial sources.
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