Under normal circumstances, companies would increase their capital in order to generate more business opportunities and make more money. However, when facing a dramatic change of operational environment, in order for the company to survive and keep up with appropriate financial ratios, companies will maintain their original capital or even deduct it.
The trend has been more and more obvious and yet we do not know much about that. Here we want to discuss the reasons for which companies do capital deduction and the types of capital deduction currently used. More importantly, we want to know the long-term performance of those companies after the capital deduction under various circumstances.
This study will review the reasons behind capital deduction and the procedure of doing it. We will also review three major methods to do capital deduction and then look at the long-tern operating performance of those companies that do capital deduction.

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