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How to describe literature review on influence of capital structure on corporate performance?

Finance Jan 19, 2021

How to describe literature review on influence of capital structure on corporate performance?

Expert Solution

Capital Structure plays a pivotal role of corporate performance. Let us understand what is capital structure. It is the mode via which company raises capital to fund its assets. Capital can be raised via debt and equity. Equity is when company gives away part stake of its company. Debt is a loan where company pays fixed interest for certain period of time. Capital structure is having the right allocation of broadly debt and equity to ensure the companies cost of capital is optimal. An optimal cost of capital will ensure companies will have better flexibility to take more ventures and projects. Companies will excellent Return of capital employed tend to have good cost of capital. It is an important lever for better corporate performance.

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