What Determines the Capital Structure of the Largest Brazilian Firms? An Empirical Analysis Using Panel Data

Correa, Carlos Alberto; Basso, Leonardo Cruz; Nakamura, Wilson Toshiro

doi:10.2139/ssrn.989047

Cited by 18 publications

(31 citation statements)

References 12 publications

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“…This generates an acceptance of the first hypothesis confirming results from Kester (1986), Titman and Wessels (1988) and Rajan and Zingales (1995). This relationship is consistent with studies undertaken for Latin America (Correa et al, 2007;Delfino, 2006;Rivera, 2007).…”

Section: Resultssupporting

confidence: 89%

“…These results are consistent with studies undertaken by Fern andez (2005) of which the results, in the Chilean case, support Trade-off Theory more than they do Pecking Order Theory. These results contrast Delfino's (2006) for the Latin American case and Correa et al (2007) for Brazilian companies. These authors manifest that Pecking Order Theory is the dominant focus on the determination of capital structure.…”

Section: Resultscontrasting

confidence: 63%

“…Despite this, literature aimed at emerging financial markets is becoming increasingly more widespread. Rivera (2007) undertook a study on the PYME sector in Colombia; Bhaduri (2002), on business in India; Chen and Strange (2005), on companies in China; Correa et al (2007), on factories in Brazil; Crnigoj and Mramor (2009) American companies. In Peru, no studies have been undertaken to determine the factors that influence capital structure.…”

Section: Capital Structure Determinantsmentioning

confidence: 99%

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The determinants of capital structure in Peru

Gómez

Rivas

Bolaños

2014

Academia Revista Latinoamericana De Administración

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2014),"Market quality and structural changes in the trading system: The case of X-Stream on the Colombian stock exchange", Academia Revista Latinoamericana de Administración, Vol. 27 Iss 3 pp. 324-340 http://dx.If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to determine the factors that influence in the capital structure of non-financial companies listed in the Stock Exchange of Lima. Design/methodology/approach -To achieve this goal, the authors used the panel data model with random effects. The study of the capital structure has focussed on the Trade-off Theory which states that firms finance their investments for tax benefits, while the Pecking Order Theory states that companies have an order of priority on obtaining funding. Findings -The results obtained confirm that profitability, size, collateral value of assets (CVA) and non-debt tax shields (NDTS) are the factors that determine the level of long-term debt of these Peruvian companies. Practical implications -The results obtained confirm that profitability, size, CVA and NDTS are the factors that determine the level of long-term debt of these Peruvian companies. Originality/value -This paper is a first contribution on the determinants of the level of indebtedness of the companies in Peru. There is an extensive literature on the determinants of capital structure, but it is the first work done for the business sector in Peru. ResumenProp osito -El objetivo de este trabajo es determinar los factores que influyen en la estructura de capital de las empresas no financieras peruanas que listan valores en la Bolsa de Valores de Lima. Diseñ o/Metodología/Enfoque -Para lograr este objetivo se ha utilizado el modelo de datos de panel con efectos aleatorios. El estudio de la estructura de capital de las empresas se ha enfocado en la teoría del trade-off que manifiesta que las empresas financian sus inversiones para obtener ventajas fiscales, mientras que la teoría del pecking order manifiesta que las empresas tienen un orden de prioridad al momento de obtener financiamiento. Resultados -Los resultados obtenidos confirman que la rentabilidad, el tamaño, el valor colateral de los activos y la protecci on fiscal diferente a la deuda son los fac...

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Section: Resultssupporting

confidence: 89%

Section: Resultscontrasting

confidence: 63%

Section: Capital Structure Determinantsmentioning

confidence: 99%

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The determinants of capital structure in Peru

Gómez

Rivas

Bolaños

2014

Academia Revista Latinoamericana De Administración

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“…It is however higher than the 28 percent reported for Swiss companies (Gaud et al, 2005), 34 percent reported for Brazilian firms (Correa et al, 2007), and 18.5 percent reported for Chinese firms (Qian et al, 2009), but quite smaller than over 79 percent reported for Spanish firms (De Miguel & Pindado, 2001). One would have expected the adjustment speed to be roughly the same as that of China or Brazil which share the same economic characteristics with South Africa.…”

Section: Resultsmentioning

confidence: 74%

Firm age, collateral value, and access to debt financing in an emerging economy: evidence from South Africa

Ezeoha

Botha

2012

SAJEMS

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This paper applies the Blundell and Bond system generalised method of moments (GMM) two-step estimator to examine the impact of age and collateral value on debt financing, using a panel of 177 non-financial companies listed on the Johannesburg Stock Exchange over the period 1999 to 2009. The results show that South African firms have target leverage ratios and adjust their capital structures from time to time to achieve their respective targets, that the relationship between firm age and debt financing is non-monotonic, and that firms with higher collateral value are likely to face fewer constraints on borrowing and therefore have greater access to medium-term and long-term debts. Robustness tests also reveal that during start-up and maturity stages, a firm’s access to debt markets is significantly influenced by investments in assets that are acceptable to external creditors as collateral. These findings suggest that debt financing policies could be more critical for firms in the start-up and maturity stages.

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“…Firms with volatility in their earnings reduce the debt ratios from capital structure (Fama & French, 2002). Firms with high volatility in their earnings use leverage conservatively in their capital structures to save potentially from financial distress cost that is caused by incapacity to meet the financial obligations (Correa, Basso, & Nakamura, 2007). Firms with high volatility in their earnings use leverage conservatively in their capital structures to save potentially from financial distress cost that is caused by incapacity to meet the financial obligations (Correa, Basso, & Nakamura, 2007).…”

Section: Literature Reviewmentioning

confidence: 99%

Stock return volatility and capital structure measures of nonfinancial firms in a dynamic panel model: Evidence from Pakistan

Ahmed

Hla

2018

Int. J Fin Econ

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We investigate the impact of stock return volatility on different capital structure measures of nonfinancial firms in a dynamic panel model. Two‐step system generalized method of moment dynamic panel estimator is applied to nonfinancial sector's data from Pakistan Stock Exchange over the period 2001–2014. The results imply that stock return volatility has a significant negative impact on book leverage and long‐term market leverage ratios. However, stock return volatility causes the increase in total market leverage ratios. Moreover, book leverage and long‐term market leverage of firms decrease as a result of an increase in stock return volatility in different classification of firms. Conversely, stock return volatility has a significant positive impact on total market leverage ratios in those classifications of firms. Capital structure decisions are more sensitive to stock return volatility as default risk increases. Firms significantly go for the reduction in their debt financing due to high stock returns volatility and to avoid from possible consequences of default. The results are robust to alternative measures such as cash flow volatility and earnings volatility.

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What Determines the Capital Structure of the Largest Brazilian Firms? An Empirical Analysis Using Panel Data

Cited by 18 publications

References 12 publications

The determinants of capital structure in Peru

The determinants of capital structure in Peru

Firm age, collateral value, and access to debt financing in an emerging economy: evidence from South Africa

Stock return volatility and capital structure measures of nonfinancial firms in a dynamic panel model: Evidence from Pakistan

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