The relationship between capital structure and financial risk: a survey of literatures

Abstract

Capital structure theories have been developing as an essential topic in finance, and it is relatively crucial for both professionals and scholars to recognize the significance of an optimal capital structure and the corresponding financial risks. The purpose of the research is to find out the previous research about capital structure, financial risk, and their relationship. As a structured and comprehensive literature review, the survey adopts the qualitative methodology, describing the fundamental definitions, the development of theories, and the important researches about China and other detailed related data. Furthermore, this paper suggests future researches to provide more in-depth knowledge with more geographic regions and respected scholars as the sample of studying capital structure, as well as the measures of financial risks.