Capital Structure and Financial Risk Management

Abstract

This chapter emphasizes the link, between capital structure and financial risk management, that is central to matching the supply with demand of monetary flows. We start by investigating how capital structure theories are applied for approach choice of operations and finance (centralization or decentralization). Next, we link approach choice and relationship analysis in the context of integrated risk management. We then categorize the types of financial flexibility and describe the various financial instruments. Finally, we study the interaction between corporate investment and financial risk management.