Funding Framework of Electric Power Companies in Brazil: A Pecking Order Theory (POT) Approach
DOI:
https://doi.org/10.11606/rco.v10i27.111487Keywords:
Pecking Order Theory and Capital Framework. Predominant Use of Capital (PUC) - Predominant Return of Capital (PRC) Relation. Preferred ways of funding electricity companies.Abstract
This paper discusses the results of a study on the funding of electricity in Brazil considering capital control and 31 companies from 1997 to 2003. The research investigated how these companies are predominantly funded: by their equity (E) following the Pecking Order Theory (POT) or third-party capital (TPC), and how funding and the rate of return relate to each other. The purpose was to analyze ways of funding and the relation between predominant use of capital (PUC) and predominant return of capital (PRC). The methodology employed analytical models and multivariate linear regression for obtaining data. Results pointed that companies have a funding system compatible with POT; the relation between E and TPC is weaker in private companies; private companies have a larger return than government owned companies; the PUC with dynamic displacement is inverse to PRC. This research innovates and stands out by relating PUC with PRC.
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