Literature review of debt and equity

Finance and Trade Economics, No.

debt financing vs equity financing pdf

Evidence from Corporate Finance Choices. Negative correlations may also exhibit a significant positive correlation and may also be in a U-shaped relationship. The impact, in which the shareholding ratio of managers and the proportion of state shares are significantly positively correlated with the debt ratio.

Literature review of debt and equity

As executives increase their holdings, corporate leverage will decrease. According to Guo Wei and GuHaiying [34] , there is a positive correlation between executive stock market value and company performance. East China Economic Management, No. Jesen and Meckling [3] pioneered the introduction of equity incentives to coordinate the interests of managers and shareholders. Finance and Trade Economics, No. The impact is mainly on the impact of executive stock holdings on leverage ratio, especially the domestic literature rarely involves the impact of executive compensation structure on capital structure. From an industry perspective, the degree of competition between product markets and financial leverage in different industries There are mutual influences. The objectives of the study is to study performance of Govt. The listed companies in China all have the phenomenon of management defense. When enterprises decide the capital structure, they must weigh the tax avoidance effect and bankruptcy cost of liabilities. When there is a management defense, the management who seeks to maximize its own interests will choose a more conservative capital structure than the shareholder value to avoid the risk of human capital bankruptcy. Social Science Electronic Publishing, 14, Similar conclusions are supported by Ghosh and Cai , Franz and Goyal

Journal of Political Economy, 98, Scholars have adopted theoretical models and empirical tests. Frank and Goyal [18] argue that PPS has a significant negative correlation with corporate leverage, and that executive stock holdings have different relationships with corporate leverage to varying degrees.

literature review on capital structure pdf

The impact of cash compensation incentives and capital structure is more pronounced. Rajang and Zingales firm size was positively correlated with leverage, Fama and French argue that, because of their level of diversification, larger firms were expected to have less volatile earnings induces a higher leverage ratio.

According to MC Jensen, KJ Murphy [21]executive compensation performance sensitivity includes cash compensation, options, equity, dismissal, and found that incentives from stocks and options are much greater than incentives from wages and bonuses.

The second part is research. According to Guo Wei and GuHaiying [34]there is a positive correlation between executive stock market value and company performance.

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Literature Review