Entertainment Industry: Unraveling Capital Structure Strategies
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Pingyu Zhou
CoPIs:
Feier Sun, Jiaxin Zheng, Zhijin Zhang
College:
College of Business and Public Management
Major:
Finance
Faculty Research Advisor(s):
Andreas Kakolyris, Tin Shan Suen
Abstract:
In the dynamic space of the film and entertainment industry, understanding the complexities of capital structure is critical to strategic decision-making. Capital structure, including debt and equity ratios, profoundly affects a business's financial health, cost of capital, and overall value. However, the precise impact of capital restructuring on these indicators remains a subject of extensive discussion and scrutiny in the finance literature. Our study investigates the sensitivities of the capital structure for all the companies in the Movies & Entertainment industry in the Standard and Poor's 500. These companies are Live Nation Entertainment, Netflix, Paramount Global, and Walt Disney. Capital structure and its impact on a firm's cost of capital and value are widely debated since they are related to the strategic decision of restructuring. The literature findings indicate that changes in the value of beta due to different leverage levels or other risk factors do not significantly affect the cost of capital. Our findings are presented and analyzed in this poster.