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Country Factors and Dynamic Capital Structure in Latin American Firms

Author

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  • Leonel Rodrigues Bogéa Sobrinho

    (Fundação Getulio Vargas - São Paulo School of Economics (FGV-EESP))

  • Hsia Hua Sheng

    (Fundação Getulio Vargas - São Paulo Business Administration School (FGV-EAESP))

  • Mayra Ivanoff Lora

    (Fundação Getulio Vargas - São Paulo Business Administration School (FGV-EAESP))

Abstract

We develop partial adjustment and duration models to test the relevance of country idiosyncrasies in determining the capital structure of publicly-traded Brazilian, Chilean and Mexican firms. Our data panel, ranging from the 4th quarter of 1996 to the 2nd quarter of 2010, consists of 4403 firm-quarter observations pertaining to 139 firms. Our findings suggest that capital structure dynamics vary by country, local idiosyncrasies are key determinants of firms’ leverage among Brazilian, Chilean and Mexican firms, and that factors other than firm-specific characteristics influence the financing decision processes of Latin American managers

Suggested Citation

  • Leonel Rodrigues Bogéa Sobrinho & Hsia Hua Sheng & Mayra Ivanoff Lora, 2012. "Country Factors and Dynamic Capital Structure in Latin American Firms," Brazilian Review of Finance, Brazilian Society of Finance, vol. 10(2), pages 267-284.
    • Handle: RePEc:brf:journl:v:10:y:2012:i:2:p:267-284
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    References listed on IDEAS

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    Cited by:

    1. Eduardo K. Kayo & Eduardo Ottoboni Brunaldi & Dante M. Aldrighi, 2018. "Capital Structure Adjustment in Brazilian Family Firms," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 22(1), pages 92-114.
    2. Carlos Omar Trejo-Pech & NyoNyo A. Kyaw & Wei He, 2021. "Capital structure adjustment behavior of listed firms on the Mexican stock exchange," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(4), pages 573-595, October.
    3. Valcacer, Santiago & José de Moura, Heber & Lopes , David & Amorim , Vinicius, 2017. "Capital structure management differences in Latin American and US firms after 2008 crisis," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 22(42), pages 51-74.

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    More about this item

    Keywords

    capital structure; adjustment costs; dynamic models; country-specific factors; firm-specific factors;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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