In each of the theories of capital structure, the cost of equity rises as the amount of debt increases. So, why don’t financial managers use as little debt as possible to keep the cost of equity down? After all, isn’t the goal of the firm to maximize share value (and minimize shareholder costs)?

Share value equals to the total firm value devided by the number of outstanding shares. To maximize share value is to maximize the firm's value. Samilarly, to maximize firm value is to minimize firm's cost of capital(WACC). Managers cannot use as little debt as possible because lowering cost of equity does not lower WACC. In most cases equity is more expensive than debt. Using little debt may cause the weight of equity increase, as a result WACC increases. According to WACC=We*Re+Wd*Rd*(1-t), there should be an equilibrium proportion of debt that maximize WACC.