Author(s)

Qin Zhang ¹, Zhixin Lv ²

Affiliation(s)

¹ Department of Economics and Trade, Anhui Lvhai Business College, Hefei, Anhui 230000, China
² Inner Mongolia Radio & TV University, huhhot, 010051, China

Corresponding Author

Qin Zhang

ABSTRACT

Enterprise earnings expectation affects the decision-making of enterprise capital structure. Therefore, this paper focuses on the relationship between enterprise expected earnings and enterprise capital structure, and determines that there is a significant positive correlation between business expectation and enterprise debt ratio. Moreover, under the same conditions, the capital structure of loss-making enterprises is more sensitive to expected earnings than profit-making enterprises. At the same time, this paper points out that listed companies which are mainly operating need to adjust the focus of capital structure to interest-bearing liabilities. Moreover, the research of this paper also has positive reference significance for the formulation of monetary policy in China.

KEYWORDS

Expected earnings, Capital structure, Qptimal debt ratio, Profitable enterprise, Interest-bearing liabilities

CITE THIS PAPER

Qin Zhang, Zhixin Lv, An Empirical Study on the Mechanism of Enterprise's Expected Surplus on Capital Structure. Financial Engineering and Risk Management (2021) 4: 96-103. DOI: http://dx.doi.org/10.23977/ferm.2021.040110

REFERENCES

[1] Hao Fengxia, Ji Yujie. Empirical analysis of the correlation between capital structure and enterprise performance in emerging industries [J]. Accounting Monthly .2014.02. 
[2] Guo Xiaofan, fan Xingjian. Research on the optimal capital structure from the perspective of enterprise growth [J]. Financial science. 2014.05 
[3] Hou Ying, Chen Zhenyu, Jin Chun. Rethinking of Capital Structure Theory [J]. Accounting Communication .2014.03. 
[4] Zhang Chunjing, Ma Wenchao. Capital structure adjustment based on business expectation [J]. Accounting research. 2014.8. (322): 67-74
[5] Mao Yuhui, Yang Yan. Review and Prospect of dynamic capital structure theory research [J]. Friends of accounting. July 2014 
[6] Yang Deming, Lin bin, Xin Qingquan. Earnings quality, investor irrational behavior and earnings inertia [J]. Financial research. February 2007

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