The impact of information asymmetry on the capital structure of listed companies in Brazil: An update of the literature, models, and results
DOI:
https://doi.org/10.1590/1808-057x2026100-4.enKeywords:
information asymmetry, bid-ask spread, financing decisions, capital structure, pecking order theoryAbstract
Building on the work of Albanez and Valle (2009), this research updates the data, proxies, and models used to investigate the impact of information asymmetry on financing decisions made by companies listed on the Brazilian market from 2010 to 2023. Few studies have been conducted in Brazil on this topic in the last decade, using bid and ask price data over such a long period. It is also important to investigate whether the inclusion of new proxies and changes in the national macroeconomic environment during this period alter the results obtained by Albanez and Valle (2009). Defining the capital structure is not a trivial decision; it has a direct impact on a company’s total cost of capital and consequently affects the wealth generated for shareholders. Analyzing the determinants of these decisions has been the focus of many finance studies. The credit and capital markets have undergone profound changes in the last decade, impacting the financial decision-making processes of Brazilian companies. Updating studies in this area is necessary to investigate the effects of these changes on companies’ capital structures. For this purpose, panel data models were employed, with firms’ leverage explained by various proxies for information asymmetry (with an emphasis on the bid-ask spread) and control variables. The main result is that, as information asymmetry among investors increases, companies use debt as a financing source more frequently to avoid the severe costs of adverse equity capital selection, as predicted by the pecking order theory. The evidence obtained in this study provides a new perspective on the impact of information asymmetry on corporate financing decisions and reflects changes in the Brazilian credit and capital markets.
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