According to Graham and Harvey (2001), an immense gap exists between capital structure theories and practice. This paper argues that this can be partially explained by current educational practices by analyzing undergraduate students'perceptions of capital structure theories and the differences between their opinion and that of the current CEO's and managers. Educators mostly focus on one or maybe two most popular theories and students have much smaller knowledge about other theories. Secondly educational practices favor trade-off theory to asymmetric information based theories. The paper provides some suggestions regarding capital structure education and future research
