Financial slack is the amount of unused access to debt markets or bank financing. Which theory of capital structure would place the highest value on maintaining financial slack for a firm that is not in financial distress?

Question options:

a$)$

Trade$-$off theory

b$)$

Debt financing as a managerial constraint

c$)$

Pecking order theory

d$)$

Modigliani & Miller irrelevance theory