Managers considered capital structure a positive signal to investors in the market. Changes regarding the degree of capital structure may transmit information on a company's profitability and its risks. An underperforming firm may have a low market value, but managers will be able to demonstrate that, in fact, their company is undervalued when they turn to debt and they will be able to support debt service.
Table 4. Empirical results of the degree of capital structure on corporate performance-significant influences
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