THE EFFECT OF CAPITAL STRUCTURE ON EARNINGS PER SHARE OF PUBLICLY TRADED COMPANIES: A REVIEW OF RELATED LITERATURE

Abstract

The purpose of this article is to conduct a review of related works on the relationship between capital structure and earnings per share of publicly traded companies to determine the nature of the relationship that exists between the two variables. A desk survey was employed to review related works. A summary of the methodology, findings and conclusions are presented to determine the extent to which the main question of the review is answered. The result revealed that there is a dearth of research on the effects of earnings per share on the capital structure of listed companies and vice versa, especially in Europe and America. The review also identified a unidirectional approach to the methodology of the reviewed works. There are divergent findings on the relationship that exists between earnings per share and capital structure which calls for more studies to be conducted to determine the behavior of these variables more clearly.

Keywords

• earnings per share (eps)
• capital structure
• performance