Mind mapping the topic of capital structure

Mind mapping the topic of capital structure (CS)

Joseph Kim-keung Ho

Independent Trainer

Hong Kong, China

Abstract: The topic of capital structure (CS) is a main one in Accounting and Finance. This article makes use of the mind mapping-based literature review (MMBLR) approach to render an image on the knowledge structure of capital structure. The finding of the review exercise is that its knowledge structure comprises four main themes, i.e., (a) Descriptions of basic concepts and information (b) Major underlying theories and thinking, (c) Main research topics and issues, and (d) Major trends and issues related to practices. There is also a set of key concepts identified from the CS literature review. The article offers some academic and pedagogical values on the topics of CS, literature review and the mind mapping-based literature review (MMBLR) approach.

Key words: Capital structure (CS), literature review, mind map, the mind mapping-based literature review (MMBLR) approach

Introduction

Capital structure (CS) is a main topic in Accounting and Finance. It is of academic and pedagogical interest to the writer who has been a lecturer on Accounting and Finance for some tertiary education centres in Hong Kong. In this article, the writer presents his literature review findings on CS using the mind mapping-based literature review (MMBLR) approach. This approach was proposed by this writer in 2016 and has been employed to review the literature on a number of topics, such as supply chain management, strategic management accounting and customer relationship management (Ho, 2016). The MMBLR approach itself is not particularly novel since mind mapping has been employed in literature review since its inception. The overall aims of this exercise are to:

1.      Render an image of the knowledge structure of capital structure  (CS) via the application of the MMBLR approach;

2.      Illustrate how the MMBLR approach can be applied in literature review on an academic topic, such as CS.

The findings from this literature review exercise offer academic and pedagogical values to those who are interested in the topics of CS, literature review and the MMBLR approach. Other than that, this exercise facilitates this writer’s intellectual learning on these three topics. The next section makes a brief introduction on the MMBLR approach. After that, an account of how it is applied to study CS is presented.

On mind mapping-based literature review

The mind mapping-based literature review (MMBLR) approach was developed by this writer in 2016 (Ho, 2016). It makes use of mind mapping as a complementary literature review exercise (see the Literature on mind mapping Facebook page and the Literature on literature review Facebook page). The approach is made up of two steps. Step 1 is a thematic analysis on the literature of the topic chosen for study. Step 2 makes use of the findings from step 1 to produce a complementary mind map. The MMBLR approach is a relatively straightforward and brief exercise. The approach is not particularly original since the idea of using mind maps in literature review has been well recognized in the mind mapping literature. The MMBLR approach is also an interpretive exercise in the sense that different reviewers with different research interest and intellectual background inevitably will select different ideas, facts and findings in their thematic analysis (i.e., step 1 of the MMBLR approach). Also, to conduct the approach, the reviewer needs to perform a literature search beforehand. Apparently, what a reviewer gathers from a literature search depends on what library facility, including e-library, is available to the reviewer. The next section presents the findings from the MMBLR approach step 1; afterward, a companion mind map is provided based on the MMBLR approach step 1 findings.

Mind mapping-based literature review on capital structure (CS): step 1 findings

Step 1 of the MMBLR approach is a thematic analysis on the literature of the topic under investigation (Ho, 2016). In our case, this is the CS topic. The writer gathers some academic articles from some universities’ e-libraries as well as via the Google Scholar. With the academic articles collected, the writer conducted a literature review on them to assemble a set of ideas, viewpoints, concepts and findings (called points here). The points from the CS literature are then grouped into four themes here. The key words in the quotations are bolded in order to highlight the key concepts involved.

Theme 1: Descriptions of basic concepts and information

Point 1.1.              “Capital structure is defined to include both the level of debt and the level of protection against bondholder wealth expropriation. This protection provides the bondholders with the power to ensure that managerial incentives are not designed to induce wealth expropriating actions. The level of bondholder power can be chosen via the composition of debt (e.g. private versus diffusely held market debt) and specific debt covenants (e.g. investment restrictions, accounting requirements, board representation)” (Douglas, 2002);

Point 1.2.              “Capital structure refers to proportional relationships among various sources of financing in a company; it is the ratio between equity-financing and debt-financing. An optimal capital structure is one that maximizes share prices or the wealth of shareholders” (Yang, Chueh and Lee, 2014);

Point 1.3.              “Capital structure refers to the way a corporation finances its assets through some combination of equity and debt …. However, there are several kinds of equity and debt ….. These are common stock, preferred stock and retained earnings (untaxed reserves) as well as bank loans, bonds, accounts payable and line of credit” (Adewale and Ajibola, 2013);

Point 1.4.              “The capital structure of any firm includes mix of debt, preference stock and equity shares. Capital structure choice is essential for any firm for maximizing return to the various stakeholders and also to develop firm’s capacity to operate in a bloodthirsty environment” (Gupta, 2015);

Point 1.5.              “Capital structure is said to be the proportion of debt and equity on a firm’s balance sheet. A levered capital structure increases the profitability but comes with a considerable level of financial risk” (Thota and Griridhar, 2016);

Point 1.6.              “The objective of capital structure determination is to mix the permanent sources of the firm's funds in a manner that will maximize the company's common stock price and thus the shareholders' value” (Vasiliou and Daskalakis, 2009);

Theme 2: Major underlying theories and thinking

Point 2.1.              “The theory of corporate capital structure has advanced significantly following Modigliani and Miller … The effects of taxes and (direct) bankruptcy costs, though well developed theoretically, appear to play a minor role empirically. The major empirical determinants of capital structure appear to information and agency problems” (Douglas, 2002);

Point 2.2.              “…firms with financing deficits and below-target debt or with financing surpluses and above-target debt are likely to adjust more rapidly towards their target debt ratios compared with firms with financing deficits (surpluses) and above (below)-target debt ratios” (Smith, Chen and Anderson, 2015);

Point 2.3.              “…higher bankruptcy costs will decrease a firm’s optimal leverage. Accordingly, lower debt ratios should be associated with firms that are smaller and less profitable, firms with greater growth opportunities, firms with fewer tangible assets, firms operating in industries with lower leverage, and firms in economies with higher inflation, which are more likely to have higher bankruptcy costs” (Ōztekin, 2015);

Point 2.4.              “…preferred stock increases the debt capacity of a firm given that a firm can delay preferred dividends … preferred stock reduces the probability of financial distress…. firms that use preferred stock to retire bank debt experience a negative shock to their stock prices” (Kallberg, Liu and Villupuram, 2013);

Point 2.5.              “A close relationship exists between capital structure and corporate governance. Building an optimal capital structure is fundamental to effective corporate governance and strong operational performance” (Yang, Chueh and Lee, 2014);

Point 2.6.              “Considerable evidence shows that changes in firm capital structure affect product-market behavior, including entry, exit, and pricing” (Matsa, 2010);

Point 2.7.              “Stockholder hypothesis: When a firm announces an issue of straight preferred stock, its equity holders have an insignificant reaction. The issue creates no dilution and it reduces the potential adverse selection problems between managers and shareholders” (Kallberg, Liu and Villupuram, 2013);

Point 2.8.              “The creation of debt reduces the agency costs of free cash flow by reducing the amount available to managers. Managers are contractually bound to repay the interest payments. If they spend the free cash on wasteful expenditures, the probability that the repayment schedule will be met decreases” (Kochhar, 1996);

Point 2.9.              “The debate over the significance of a company’s choice of capital structure is esoteric. But, in essence, it concerns the impact on the total market value of the company (i.e., the combined value of its debt through investment and equity). Financial experts traditionally believed that increasing a company’s leverage (the proportion of debt in the company’s capital structure) would increase its value up to a certain point” (Adewale and Ajibola, 2013);

Point 2.10.         “THE STANDARD CORPORATE finance paradigm posits that a firm determines its optimal capital structure by making tradeoffs between the tax advantages of debt, the expected costs of financial distress, the impact of asymmetric information, and the implications for managerial incentives. But interactions with the firm’s real activities may play an important role as well” (Matsa, 2010);

Point 2.11.         “The theory of the capital structure is an important reference theory in enterprise’s financing policy. Whether or not an optimal capital structure exists is one of the most important and complex issues in corporate finance.…. if a wrong mix of finance is employed, the performance and survival of the business enterprise may be seriously affected” (Adewale and Ajibola, 2013);

Point 2.12.         “THE VIEW THAT CORPORATE leverage is stable pervades the empirical capital structure literature, and has fostered a belief that the main puzzle facing researchers is to explain cross-firm variation in leverage” (DeAngelo and Roll, 2015);

Point 2.13.         “There are various types of finance, each with its individual characteristics. Large firms normally need short-term, medium-term and long-term finances to carry on their business operations. These finances in terms of nature could be internal or external. An optimal capital structure will, however, require the combination of capital from the available sources at the least possible cost” (Adewale and Ajibola, 2013);

Point 2.14.         “…a number of papers …. argue that the pecking order and trade-off models of capital structure may complement each other rather than being mutually exclusive” (Smith, Chen and Anderson, 2015);

Point 2.15.         “…preferred stock is ….. neither equity nor debt, which creates ambiguity about its impact on firm value and the potential reactions of various firm stakeholders. Evidence of its hybrid nature can be seen from the differences between a firm's preferred stock ratings and the ratings on its subordinated debt issues, which are most significant for lower credit quality firms. Furthermore, firms vary in their accounting treatment of a preferred issue; some firms considering it as equity, some as debt and others as hybrids” (Kallberg, Liu and Villupuram, 2013);

Point 2.16.         “…when an MNC based in a more (less) stable economy expands its operations into less (more) stable economies, the MNCs' overall systematic risk may increase (decrease) because the beta of its international project could be higher (lower) than the average beta of the firm. This hypothesis predicts that when MNCs domiciled in more (less) stable economies make international investments, they will experience an increase (decrease) in their business risk and consequently, they will have a lower (higher) financial leverage, compared to DCs [domestic corporations]” (Mittoo and Zhang, 2008);

Point 2.17.         “A CENTRAL THEME IN financial economics is that incentive conflicts within the firm lead to distortions in corporate policy choices and to lower corporate performance. Because debt limits managerial flexibility …, a particular focus of the theoretical research has been on the importance of managerial objectives in capital structure choice. A prevalent view in the literature is that self-interested managers do not make capital structure decisions that maximize shareholder wealth” (Morellec, Nikolov and Schürhoff, 2012);

Point 2.18.         “According to pecking order theory…., the existence of informative asymmetry between the company and the market, as well as the disciplinary effect exerted by the market on companies, means that businesses prefer internally generated funds for financing to external financing. If the internally generated funds are inadequate, debt financing will be used. This theory does not support the existence of an optimal debt ratio” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 2.19.         “Aivazian and Booth … compare companies’ dividend and capital structure decisions in emerging economies and developed economies. They find that firms with financial constraints due to higher debt ratios choose to pay lower dividend payments” (Alias et al., 2014);

Point 2.20.         “Based upon a large data set of public and private firms in the United Kingdom, I find that compared to their public counterparts, private firms rely almost exclusively on debt financing, have higher leverage ratios, and tend to avoid external capital markets, leading to a greater sensitivity of their capital structures to fluctuations in performance. I argue that these differences are due to private equity being more costly than public equity” (Matsa, 2010);

Point 2.21.         “Financial theory predicts that multinational corporations (MNCs) should have higher leverage compared to domestic corporations (DCs) because of their relatively larger size, lower cash flow volatility, and increased access to international capital markets. However, contrary to this prediction, most studies find that U.S. MNCs display lower debt ratios than do domestic corporations” (Mittoo and Zhang, 2008);

Point 2.22.         “It has been suggested that the capital structure of a firm results from managerial risk-taking propensity…, is affected by corporate governance mechanisms…, and influences the diversification strategy of a firm” (Kochhar, 1996);

Point 2.23.         “Many theories of capital structure have been proposed. But only a few seem to have many advocates.  Notably, most corporate finance textbooks point to the “trade-off theory” in which taxation and deadweight bankruptcy costs are key. Meyers (1984) proposed the “pecking order theory” in which there is a financing hierarchy of retained earnings, debt, and then equity. Recently, the idea that firms engage in “market timing” has become popular. Finally, agency theory lurks in the background of much theoretical discussion. Agency concerns are often lumped into the trade-off framework broadly interpreted” (Frank and Goyal, 2009);

Point 2.24.         “One development in capital structure theory has been the appearance of models deploying theories of industrial organization to approach corporate capital structure issues …. There are two main categories of such models: one exploiting the relationship between a firm’s capital structure and its strategy and the other addressing the relationship between a firm’s capital structure and the characteristics of its product or inputs” (Guzhva and Pagiavlas, 2003);

Point 2.25.         “Previous researches have found that a firm’s capital structure is not only influenced by firm-specific variables but also by country-specific factors … Furthermore, country-specific factors can also influence firm leverage through their impact on the effect of firm specific variables” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 2.26.         “The firm's competitive strategy approach of capital structure analyzes how the firm's competitive strategy can affect capital structure determination. There are actually several sub-approaches that offer several insights to this issue. For example, an aggressive strategy may imply a highly leveraged capital structure that will lead to a higher production … On the other hand, … “deep-pocket” firms (with high cash flows and thus low financial leverage) will have the power to remove highly leveraged competitors, by following aggressive strategies (for example large price declines)” (Vasiliou and Daskalakis, 2009);

Point 2.27.         “The market structure approach of capital structure puts emphasis on the specific characteristics of each industry, implying that firms that belong to the same industry will tend to determine similar capital structures following industry norms and ratios” (Vasiliou and Daskalakis, 2009);

Point 2.28.         “The modern theory of the capital structure originated from the path-breaking contribution of Modigliani and Miller in 1958. Under the perfect capital market assumption, i.e., if there is no bankruptcy cost and capital markets are frictionless, if without taxes, the firm’s value is independent of the structure of the capital” (Adewale and Ajibola, 2013);

Point 2.29.         “The optimal capital structure depends not only on the conflict of interest between debt holders and shareholders, but also on the conflict of interest between the manager and owners. In particular, the manager’s information advantages (hidden actions and hidden knowledge) imply that optimal incentive contracts provide the manager with rents (utility in excess of his reservation level)” (Douglas, 2002);

Point 2.30.         “The stakeholder theory of capital structure states that apart from shareholders and creditors, other groups (i.e. customers and employees) are also interested in corporate matters and may influence the firm's capital structure” (Vasiliou and Daskalakis, 2009);

Point 2.31.         “The trade-off theory supports the existence of an optimal capital structure, an optimal debt ratio that is determined by the contrasting benefits of debt [tax shield and disciplinary role of debt to reduce free cash flow (CF) problems] and the cost of debt (bankruptcy costs and the agency costs between shareholders and bondholders)” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 2.32.         “Theoretical research in venture finance consistently repeats the proposition that convertible preferred equity is optimal. Previous empirical research has considered up to 213 observations from US venture capital (VC) funds.…. US tax law biases venture capitalist’s and entrepreneur’s incentives to use convertible preferred equity, and this tax bias is the only plausible explanation for the US VC industry’s remarkable convergence on only one security” (Cumming, 2005);

Point 2.33.         “Bondholder hypothesis: When a firm announces an issue of preferred stock its bondholders react favorably. The issue decreases both the firm's leverage and its financial distress risk” (Kallberg, Liu and Villupuram, 2013);

Theme 3: Main research topics and issues

Point 3.1.              “…a concentrated ownership structure does not favour information flow to investors first because it costs, and second because information flow can be considered as a disadvantage in the product market. Thus, managers and large blockholders will not be willing to allow information to flow simply because of competition reasons in the product market, especially when financial managers value competitiveness higher than information flow. However, this lack of information creates agency costs of debt, because debt providers are not well informed about the firm's future prospects” (Vasiliou and Daskalakis, 2009);

Point 3.2.              “A wide range of empirical research has been undertaken to examine the validity of the trade-off and pecking order theories. The empirical literature tends to focus on testing theoretical predictions about the impact of firm-specific factors on leverage … and exploring the influence of external and contextual factors, such as market conditions and institutional characteristics” (Nguyen, Diaz-Rainey and Gregoriou, 2014);

Point 3.3.              “Despite the established nature of the empirical literature on capital structure, a shortage of research in the Vietnamese context is apparent” (Nguyen, Diaz-Rainey and Gregoriou, 2014);

Point 3.4.              “From the shareholders’ viewpoint, profitability does not necessarily add value to their wealth unless and until it translates into dividend payment and price appreciation. Therefore, it is crucial to examine whether or not having certain characteristics of board structure and capital structure would enhance or weaken the joint role of board structure and capital structure in influencing dividend payment” (Alias et al., 2014);

Point 3.5.              “Recent capital structure research by Byoun … has investigated the influence of financial deficits and surpluses on firms’ speed of adjustment towards target debt ratios, while work by Kayo and Kimura …  examines whether industry characteristics directly influence financial leverage” (Smith, Chen and Anderson, 2015);

Point 3.6.              “Recent papers have analyzed the influence of transaction costs and the speed of adjustment in achieving the optimal capital structure” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 3.7.              “Since the 1950s, financial economists have proposed different theories about the financial structure of firms and its influence on the value of their stocks. However, despite the huge number of studies published on this subject, there is still no consensus among academics on whether an optimal financial structure actually exists or on the factors that influence this financial structure” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 3.8.              “With the development of corporate governance theory, considerable research attention has been paid to the impact of corporate governance on capital structure …. Many studies have examined the expropriation behaviors of minority shareholders arising from the separation of control rights and cash flow rights of ultimate owners” (Su, Wan and Li, 2013);

Point 3.9.              “Capital structure is one of the most complex decisions in the area of corporate finance. Due to its Interrelationship with other financial decision variables and ability to influence the shareholder value, it becomes a critical area to study. It is a vast area consisting of different sources of capital, conflicting theories and an endless debate about the optimal mix” (Thota and Griridhar, 2016);

Point 3.10.         “Despite phenomenal growth in the theory of capital structure there is no unique theoretically predicted relationship between various firm specific business, financial, and lifecycle stage characteristics on one hand and composition and degree of financial leverage and consequent cost of capital on the other. This is particularly so in the case of issues related to multinational corporations’ (hereafter MNCs) financial structure choices and the cost of capital implications of those choice” (Singh and Nejadmalayeri, 2004);

Point 3.11.         “Earlier studies provide a substantial body of empirical evidence … suggesting that MNCs tend to carry less debt in their capital structure than domestic firms. However, more recent evidence … suggests that not only MNCs carry more debt than domestic corporations (hereafter DCs), their cost of debt financing is also lower than that of DCs … At present, the debate focuses on resolving the obvious question: why, despite a lower cost of debt financing, MNCs carry less debt?” (Singh and Nejadmalayeri, 2004);

Point 3.12.         “Several recent studies show that the country-specific factors have a strong influence on the firm's capital structure … This influence is likely to be more pronounced for MNCs because unlike domestic firms, they have to deal with the institutional environments of both home and host countries. Untangling the country-specific effects from industry and firm specific effects in a multicountry setting is a challenging task” (Mittoo and Zhang, 2008);

Point 3.13.         “The academic research [on capital structure] ranges from the seminal work of Modigliani and Miller …., to the theoretical development of Hart …  and many others, to a huge volume of empirical studies. Almost all of this research has focused on the debt versus equity decision, leaving aside the issue of preferred stock. This is an important omission since preferred stock is an essential source of capital for many U.S. corporations” (Kallberg, Liu and Villupuram, 2013);

Point 3.14.         “To date, most prior research on MNCs' capital structures has been done in the U.S. context. To what extent those findings, and explanations offered in the U.S. case hold in other countries have been largely unexplored” (Mittoo and Zhang, 2008);

Point 3.15.         “When financial policy affects a firm’s competitive position in product or input markets, the firm has an incentive to set its capital structure strategically to influence the behavior of competitors, customers, or suppliers. Although this argument is well understood in theory, its empirical relevance is much less clear” (Matsa, 2010);

Point 3.16.         “When corporations decide on the use of debt finance, they are reallocating some expected future cash flows away from equity claimants in exchange for cash up front. The factors that drive this decision remain elusive despite a vast theoretical literature and decades of empirical tests. This stems in part from the fact that many of the empirical studies are aimed at providing support for a particular theory. The amount of evidence is large, and so it is often all too easy to provide some empirical support for almost any idea” (Frank and Goyal, 2009);

Point 3.17.         “…the main deficiency of the pecking order theory is that it strongly emphasizes the role of information asymmetry in causing adverse selection problems. This means that if information asymmetry is reduced, the pecking order theory is unable to explain the capital structure decisions of companies” (Yang, Chueh and Lee, 2014);

Theme 4: Major trends and issues related to practices

Point 4.1.              “…when managers issue securities, they consider the time-varying relative costs of issuances for debt and equity .... This market timing motivates the prediction that firms alter their leverage to exploit favorable pricing opportunities” (Ōztekin, 2015);

Point 4.2.              “Capital structure management still remains one of the most controversial issues in corporate finance. …. On the one hand, there are several theories that give us precious hints but none of them has shown us the path yet. On the other hand, empirical results are often contradictive. Yet, the financing decision is of great importance. A false decision on debt policy may lead the firm to severe financial distress and eventually to bankruptcy” (Vasiliou and Daskalakis, 2009);

Point 4.3.              “SOEs [in Vietnam] have more debt than their private counterparts due to their close relationship with state-owned banks” (Nguyen, Diaz-Rainey and Gregoriou, 2014);

Point 4.4.              “Whenever market moves down companies can reduce the debt and as the market comes back on the track, companies revive their high levered position. But all the companies do not have this flexibility to correct their capital structure so easily” (Rastogi, 2016);

Point 4.5.              “…firms of bank-oriented economies have a more concentrated ownership structure, with less separation between property and control, making it easier for majority shareholders to monitor managerial performance and thereby reduce agency costs, whereas firms listed on the Anglo-Saxon stock markets tend to have less concentrated ownership structures and high informative transparency” (Acedo-Ramírez and Ruiz-Babestre, 2014);

Point 4.6.              “…the problems of wealth transfers from debtholders to shareholders are unlikely to exist for keiretsu firms [in Japan] because the large shareholders are also large debtholders. The concentration of borrowing and the linkage between debt and equity reduces the cost of financial distress because it reduces conflicts between investors when a firm is near default” (Mittoo and Zhang, 2008);

Point 4.7.              “Dabrowska … examines the influence of capital structure on dividend policy and finds that long term obligations increases with the amount of dividend for two reasons. Firstly, dividend payout limits assets for reinvestment purpose, therefore companies in particular sector such as food sector are forced to use external financing and prefer debt to equity. Secondly, companies with temporary liquidity problems are forced to finance dividend payout via external financing measures” (Alias et al., 2014);

Point 4.8.              “Demirguc-Kunt and Maksimovic …  show that in countries where legal systems score high on an efficiency index, a greater proportion of firms use long-term external financing” (Vasiliou and Daskalakis, 2009);

Point 4.9.              “New Zealand’s relatively undeveloped capital markets and its small equity market in particular help to explain why New Zealand firms may resort to debt financing in preference to equity” (Smith, Chen and Anderson, 2015);

Point 4.10.         “Chen … conducted a study to probe the variables that influence capital structure choice of Chinese listed companies. He observed that similar variables affect the capital structure of Chinese listed firms as observed for companies in developed countries. Moreover he observed that capital structure models developed in Western world have limited explanatory power” (Sheikh, 2015);

Each of the four themes has a set of associated points (i.e., idea, viewpoints, concepts and findings). Together they provide an organized way to comprehend the knowledge structure of the capital structure (CS) topic. The bolded key words in the quotation reveal, based on the writer’s intellectual judgement, the key concepts examined in the CS literature. The referencing indicated on the points identified informs the readers where to find the academic articles to learn more about the details on these points. The process of conducting the thematic analysis is an exploratory as well as synthetic learning endeavour on the topic’s literature. Once the structure of the themes, sub-themes[1] and their associated points are finalized, the reviewer is in a position to move forward to step 2 of the MMBLR approach. The MMBLR approach step 2 finding, i.e., a companion mind map on CS, is presented in the next section.

Mind mapping-based literature review on CS: step 2 (mind mapping) output

By adopting the findings from the MMBLR approach step 1 on capital structure (CS), the writer constructs a companion mind map shown as Figure 1.

Referring to the mind map on CS, the topic label is shown right at the centre of the map as a large blob. Four main branches are attached to it, corresponding to the four themes identified in the thematic analysis. The links and ending nodes with key phrases represent the points from the thematic analysis. The key phrases have also been bolded in the quotations provided in the thematic analysis. As a whole, the mind map renders an image of the knowledge structure on CS based on the thematic analysis findings. Constructing the mind map is part of the learning process on literature review. The mind mapping process is speedy and entertaining. The resultant mind map also serves as a useful presentation and teaching material. This mind mapping experience confirms the writer’s previous experience using on the MMBLR approach (Ho, 2016). Readers are also referred to the Literature on literature review Facebook page and the Literature on mind mapping Facebook page for additional information on these two topics.

Concluding remarks

The MMBLR approach to study CS provided here is mainly for its practice illustration as its procedures have been refined via a number of its employment on an array of topics (Ho, 2016). No major additional MMBLR steps nor notions have been introduced in this article. In this respect, the exercise reported here primarily offers some pedagogical value as well as some systematic and stimulated learning on capital structure (CS) in Accounting and Finance. Nevertheless, the thematic findings and the image of the knowledge structure on CS in the form of a mind map should also be of academic value to those who research on this topic.

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[1] There is no sub-theme generated in this analysis on CS.