Welcome to Scholar Publishing Group

International Journal of Social Sciences and Economic Management, 2024, 5(2); doi: 10.38007/IJSSEM.2024.050215.

Impact of Capital Structure Optimization on Enterprise Value

Author(s)

Meijie Du, Baifang Liu, Yukun Lin

Corresponding Author:
Baifang Liu
Affiliation(s)

School of Business, Beijing Language and Culture University, Beijing, China

Abstract

Capital structure is a crucial part of corporate financial management. This article aims to reveal the potential impact of capital structure optimization on the overall value of enterprises by studying its impact. This article analyzes the impact of asset liability ratio, current liability ratio, and long-term liability ratio on corporate value by selecting financial data from 8 representative listed companies from 2018 to 2022. This article finds that optimizing capital structure has a positive effect on the economic value added of enterprises. Meanwhile, under the influence of controlling for other variables, the size, profitability, and growth of the enterprise have a moderating effect on the optimization effect. This study provides key factors for further understanding the financial decision-making of enterprises.

Keywords

Capital Structure Optimization; Enterprise Value; Debt Ratio; Leverage Effect; Ownership Structure

Cite This Paper

Meijie Du, Baifang Liu, Yukun Lin. Impact of Capital Structure Optimization on Enterprise Value. International Journal of Social Sciences and Economic Management (2024), Vol. 5, Issue 2: 107-112. https://doi.org/10.38007/IJSSEM.2024.050215.

References

[1] Shen Shenghong, Jin Daozheng, Li Zhiping.Research on Financial Leverage and Shareholder Interests [J].Financial management Research,2021(2):10.67-76

[2] Wang Jiaxin, Sun Mengna.The "Mystery of Porter's Hypothesis" of Green Development and Governance Transformation--Evidence of Corporate Leverage Reduction under Carbon Risk [J].Copying newspaper materials: Business Management Research, 2022(5):16-16.

[3]Panda A K, Nanda S, Hegde A A, Yadav A K K. Receptivity of capital structure with financial flexibility: a study on manufacturing firms[J]. International Journal of Finance & Economics, 2023, 28(2): 1981-1993.

[4]Czerwonka L, Jaworski J. Capital structure determinants of small and medium-sized enterprises: evidence from Central and Eastern Europe[J]. Journal of Small Business and Enterprise Development, 2021, 28(2): 277-297.

[5]Ugur M, Solomon E, Zeynalov A. Leverage, competition and financial distress hazard: Implications for capital structure in the presence of agency costs[J]. Economic Modelling, 2022, 108(3): 105740-105740.

[6]Ngoc N M, Tien N H, Thu T H. The Impact of Capital Structure on Financial Performance of Logistic Service Providers Listed on Ho Chi Minh City Stock Exchange[J]. PalArch's Journal of Archaeology of Egypt/Egyptology, 2021, 18(2): 688-719.

[7]DeAngelo H. The capital structure puzzle: What are we missing?[J]. Journal of Financial and Quantitative Analysis, 2022, 57(2): 413-454.

[8]Pan X, Wang Y, Zhang C, et al. The impact of platform economy on enterprise value mediated by technological innovation[J]. Journal of Business Research, 2023, 165: 114051-114051.

[9]Abdi Y, Li X, Càmara-Turull X. Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age[J]. Environment, Development and Sustainability, 2022, 24(4): 5052-5079.

[10]Shaik M B, Kethan M, Rani I, Jayanti K,Mahesh U,Harsha C S,et al. Which determinants matter for capital structure? an empirical study on NBFC'S in India[J]. International Journal of Entrepreneurship, 2022, 26: 1-9.

[11]Zhao T, Xiao X, Zhang B. Economic policy uncertainty and corporate social responsibility performance: evidence from China[J]. Sustainability Accounting, Management and Policy Journal, 2021, 12(5): 1003-1026.

[12]Mansour M, Al Amosh H, Alodat A Y, Khatib S F A,Saleh M W A. The relationship between corporate governance quality and firm performance: The moderating role of capital structure[J]. Sustainability, 2022, 14(17): 10525-10525.

[13]D'Amato A. Does intellectual capital impact firms' capital structure? Exploring the role of firm risk and profitability[J]. Managerial finance, 2021, 47(9): 1337-1356.

[14]Dakhli A. The impact of ownership structure on corporate social responsibility: the moderating role of financial performance[J]. Society and Business Review, 2021, 16(4): 562-591.

[15]Adeneye Y B, Kammoun I, Ab Wahab S N A. Capital structure and speed of adjustment: the impact of environmental, social and governance (ESG) performance[J]. Sustainability Accounting, Management and Policy Journal, 2023, 14(5): 945-977.