Modigliani–Miller theorem shows Capital Structure is not relevant. The theorem assumes no Taxes, bankruptcy costs, agency costs, and assyemtric information. Corportate Finance deals with all these realities!
Taxes - firms should borrow more to capture the advantage of taxes, why should they stop leveraging?
Bankruptcy costs reduce the value of the firm when it needs to restructure, they are not cheap
Debt has a cost even before the firm reaches bankruptcy, for example debt overhang limits the frim from good investments, it is the job of the CFO to avoid this level of debt, while seeking to maximize the tax benefits of debt
Some times changing macro conditions such as inflation and interest rates change the right debt level forcing companies into debt overhang, like the 70s, 2023 changes are significant too
Assymetric costs and signaling influence how to raise capital for the firm. Issue stock or bonds?
It is normal for a growing company to borrow money due to increase in working capital