Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Business and Policy Studies
Series Vol. 8 , 13 September 2023
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Deviation from the Target Capital Structure and Acquisition Choices
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Abstract
This paper aims to discuss how managers consider capital structure variations when deciding which purchases to make. Compared to their debt ratio, highly leveraged companies are less likely to decide to buy cash. These companies purchase unimportant goals at a bargain. The capital structures of over-leveraged companies are changed by their managers in anticipation of a merger or acquisition. The methodology entails the approach to the research, and the right debt-to-capital ratio was found by using Compustat and the Center for Research on Security Prices (CRSP). These data will be used in assessing the estimation model and various regression and correlation analyses. Finally, they look for acquisitions that will add the most value. This research examines the relationship between capital structure and investment choices in the context of financial frictions, highlighting the importance of capital structure in investment choices.
Keywords
capital structure, target capital structure, leverage ratio, debt capitalization
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Business and Policy Studies
- ISBN (Print)
- 978-1-915371-43-0
- ISBN (Online)
- 978-1-915371-44-7
- Published Date
- 13 September 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/8/20230289
- Copyright
- 13 September 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited