Bed Bath & Beyond: The Capital Structure Decision

Research Article
Open access

Bed Bath & Beyond: The Capital Structure Decision

Zhehao Li 1*
  • 1 School of Finance, Capital University of Economics and Business, Beijing, China    
  • *corresponding author 32024110101@cueb.edu.cn
AEMPS Vol.189
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-179-2
ISBN (Online): 978-1-80590-180-8

Abstract

The retail industry has undergone profound changes in recent years, particularly with the rapid rise of e-commerce and shifts in consumer shopping habits. Many traditional retailers have had to adjust their business models and capital structures to cope with market competition and financial pressures. Bed Bath & Beyond, as an iconic home goods retailer in the United States, was once a market leader in the home furnishings sector. This study focuses on BBBY's capital structure and its implications for the retail industry. By analyzing BBBY's debt levels, equity structure, and financing strategies, this paper found that the low return on cash holdings drags down the ROE and there is inefficient use of capital since BBBY has a lot of cash but no debt. This research aims to reveal the impact of capital structure on a company's financial health and long-term development. The findings not only provide an in-depth explanation for BBB's financial situation but also offer valuable insights for other retailers in optimizing capital structures and managing financial risks. The opinion of this paper to use trade off theory that appropriate level of debt can improve the profitability of Bed Bath & Beyond.

Keywords:

Capital structure, Stock returns, Cash flow

Li,Z. (2025). Bed Bath & Beyond: The Capital Structure Decision. Advances in Economics, Management and Political Sciences,189,1-10.
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References

[1]. Scott Jr, J. H. (1976). A theory of optimal capital structure. The bell journal of economics, 33-54.

[2]. Afrasiabishani, J., Ahmadinia, H., & Hesami, E. (2012). A comprehensive review on capital structure theories. The Romanian Economic General, 15(45), 3-26.

[3]. Dutch Fayard, Lorraine S. Lee, William J.s Kettinger. (2012) Effect of internal cost management, information systems integration, and absorptive capacity on inter-organizational cost management in supply chains Economics · Accounting Organizations and Society DOI:10.1016/J.AOS.2012.02.001

[4]. Azriah Amir, Sopfiah Md Auzair and Rozita Amiruddin. (2015) Cost management, entrepreneurship and competitiveness of strategic priorities for smalld medium enterprises doi: 10.1016/j.sbspro.2016.04.046

[5]. Mohammad Mahdi Rounaghi , Hajer Jarrar,Leo‑Paul Dana(2021) Implementation of strategic cost management in manufacturing companies: overcoming costs stickiness and increasing corporate sustainability Rounaghi et al. Futur Bus J 2021, 7(1):31 https://doi.org/10.1186/s43093-021-00079-4

[6]. Bed Bath & Beyond INC -10-Quartely Report – 08/28/2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 http://www.getfilings.com/o0001104659-04-029164.html

[7]. Modigliani and Miller (1958)The Cost of Capital, Corporation Finance and the Theory of Investment

[8]. Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. Journal of Finance, 28(4), 911–922.s

[9]. Myers, S. C., & Majluf, N. S. (1984) Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have

[10]. Bharath, S. T., Pasquariello, P., & Wu, G. (2009) Does Asymmetric Information Drive Capital Structure Decisions?

Cite this article

Li,Z. (2025). Bed Bath & Beyond: The Capital Structure Decision. Advances in Economics, Management and Political Sciences,189,1-10.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: The 3rd International Conference on Management Research and Economic Development

ISBN：978-1-80590-179-2(Print) / 978-1-80590-180-8(Online)
Editor：Canh Thien Dang
Conference website: https://2025.icmred.org/
Conference date: 30 May 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.189
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Scott Jr, J. H. (1976). A theory of optimal capital structure. The bell journal of economics, 33-54.

[2]. Afrasiabishani, J., Ahmadinia, H., & Hesami, E. (2012). A comprehensive review on capital structure theories. The Romanian Economic General, 15(45), 3-26.

[3]. Dutch Fayard, Lorraine S. Lee, William J.s Kettinger. (2012) Effect of internal cost management, information systems integration, and absorptive capacity on inter-organizational cost management in supply chains Economics · Accounting Organizations and Society DOI:10.1016/J.AOS.2012.02.001

[4]. Azriah Amir, Sopfiah Md Auzair and Rozita Amiruddin. (2015) Cost management, entrepreneurship and competitiveness of strategic priorities for smalld medium enterprises doi: 10.1016/j.sbspro.2016.04.046

[5]. Mohammad Mahdi Rounaghi , Hajer Jarrar,Leo‑Paul Dana(2021) Implementation of strategic cost management in manufacturing companies: overcoming costs stickiness and increasing corporate sustainability Rounaghi et al. Futur Bus J 2021, 7(1):31 https://doi.org/10.1186/s43093-021-00079-4

[6]. Bed Bath & Beyond INC -10-Quartely Report – 08/28/2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 http://www.getfilings.com/o0001104659-04-029164.html

[7]. Modigliani and Miller (1958)The Cost of Capital, Corporation Finance and the Theory of Investment

[8]. Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. Journal of Finance, 28(4), 911–922.s

[9]. Myers, S. C., & Majluf, N. S. (1984) Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have

[10]. Bharath, S. T., Pasquariello, P., & Wu, G. (2009) Does Asymmetric Information Drive Capital Structure Decisions?

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