Determinant factors of capital structure in the Brazilian market: an analysis of the regression with data covering the period from 1999 to 2003

Abstract

This article presents the results of an investigation about the determinant factors of the capital structure of publicly held companies that operate in the Brazilian market. The sample group consisted of 91 companies, covering the period from 1999 to 2003. A stronger estimation technique conjugating Dynamic Panel Data, which combines cross-section data with time-series, with a generalized method of moments (GMM) tool was used in the performance of this study. The accounting and market concepts were used as capital structure and leverage proxies, and their results were compared. In conformity with literature from the area, the following variables were selected: current ratio, company size, return, growth opportunity, business risk, fiscal economy and sales growth, tangibility, coefficient of variation and bankruptcy risk. The GMM and AH econometric tools were used for the tests. The econometric results proved robust due to the techniques used. The analysis results obtained were largely consistent with the Pecking Order and Trade-off theories. These results are also in line with the results observed in similar studies carried out in several countries.