Abstract
Corporate capital structure is one of the key elements of long-term development, which determines the company value.Consequently, defining the factors that influence the debt load level of a company and, hence, its capital structure is also of great importance.
 In this paper we have collected a sample of data of 753 Russian companies and 292 Brazilian companies for 2020 to evaluate the influence of various factors on their debt-load level. The data was downloaded from Bloomberg database and the basis of the analysis focuses on evaluation of conventional academic theories on capital structure, and a regression analysis based on variables extracted from a set of original hypotheses.
 Among our results, our analysis illustrates that individual sets of determinants differ significantly in explanatory power, and operate unequally when contrasting Russian companies and Brazilian ones. Additionally, it was established that when companies define their debt load, they do not limit themselves to a single theory of capital structure. We conclude, inter alia, that it is impossible to identify with confidence which of the examined theories companies are most likely to follow in their actions, because observed interrelations between relevant variables and debt load have indications of various academic theories.
Highlights
In the current circumstances of ever-rising competition, a company’s long-term development is inextricably entwined with its efficiency in all economic sectors
Inter alia, that it is impossible to identify with confidence which of the examined theories companies are most likely to follow in their actions, because observed interrelations between relevant variables and debt load have indications of various academic theories
It was established that on the basis of this set of determinants, it is impossible to identify with confidence which of the two theories companies are most likely to follow in their actions, because the observed interrelations between the examined factors and debt load have indications of the trade-off theory as well as the pecking order theory
Summary
In the current circumstances of ever-rising competition, a company’s long-term development is inextricably entwined with its efficiency in all economic sectors. The positive significant relation between tangibility (the share of fixed assets in corporate assets to be more exact), and corporate debt load confirm both theories of capital structure because it shows that the more opportunities a company has to offer a pledge to secure a debt, the higher that company’s debt load. A positive significant relationship between the company size and debt load confirms the trade-off theory of capital structure and indicates that it is expressed in smaller risks of bankruptcy and financial imbalance and in more stable cash flows.
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Schedule a callMore From: Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438
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