Can capital structure mismatch influence corporate risk-taking? From the prospective of earning management

Wen Li and Qibo Zhou

Finance Research Letters, 2025, vol. 73, issue C

Abstract: This paper empirically investigates how capital structure imbalance affects corporate risk-taking among non-financial companies listed on the Shanghai and Shenzhen A-share markets in China. The findings reveal that a mismatch in capital structure significantly lowers the level of corporate risk-taking. Mechanism testing indicates that this inhibitory effect operates through the influence on earnings management. Additional subgroup analyses show that the dampening effect of capital structure imbalance on corporate risk-taking is more pronounced in privately-owned enterprises.

Keywords: Earnings management; Corporate risk-taking (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324015952

DOI: 10.1016/j.frl.2024.106566

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