One of the points we emphasize is that executive pay arrangements have provided executives with powerful incentives to generate favorable short-term results at the expense of long-term firm value.
From the perspective of debt interest structure, interest-bearing debt ratio is a explanatory factor in the negative firm value;
What is the difference between stock price maximization, firm value maximization and stockholder wealth maximization?
Capital structure is related to firm market value, and the relation between capital structure and firm value is systematically discussed by the theory of time marketing.
Taking the financial markets and financial intermediaries for the platform, the firm investment, financing and management of operating capital can create and maintain firm value more efficiently.
Conversely, an action that increases the stock price in a world where the less restrictive assumptions do not hold, may not necessarily increase firm value.
Out empirical results support free cash flow hypothesis: debt financing could reduce free cash flow, force manager to promote management, improve investment efficiency, and help increase firm value.
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