Determinants of capital structure: an analysis of ibovespa enterprises from 1995 to 2007

Abstract

Capital structure has been studied many times in the area of corporate finance. However, defining optimal capital structure is not a simple task. Among current theories the most important are Tradeoff and Pecking Order. The first deals with an optimum level of capital from third parties, whereas the second mentions the existence of a hierarchy in the choice between the use of resources owned and the use of capital from third parties. Accordingly, this article verifies determinant factors of capital structure for 45 companies on the Sao Paulo stock exchange (IBOVESPA) from 1995 to 2007 by using regression analysis with panel data. Therefore 16 independent variables were analyzed with respective lags during 12 years identifying 6 variables as significant. Results did not corroborate the theories indicating a possible incompatibility between these assumptions and the Brazilian stock market. Only tangibility was significant in this analysis while macroeconomic factors disclosed greater relevance than expected.