Abstract
Abstract The aim of this paper is to analyze the influence of the recent recession and of macroeconomic variables over the indebtedness in Brazilian industry sectors. The gap derives from the preference for investigating the reaction of capital structure according to economic sectors. However, it has to be considered that industry sectors react differently to variations in the economic context, since they have different optimal points of capital structure composition. The relevance of the chosen topic lies in carrying out a sectorial analysis of the effect of recession and of macroeconomic variables on capital structure composition, identifying the most sensitive sectors. It is also relevant in terms of being based on classical financial theories applied to the current context, in order to help predict the proportion of debt given fluctuations in a set of macroeconomic variables. Standing out among the main contributions of this article are the analysis of the level of indebtedness of Brazilian companies given the occurrence of recession and variations in the macroeconomy, identifying sectors that are most exposed to modifying their capital structure due to these factors. Six research hypotheses were formulated and tested using multiple linear regression, with two-stage fixed effects based on panel data collected from 211 companies, classified into six sectors, with data relating to the first quarter of 2010 up to the first quarter of 2018. The results revealed that the recent Brazilian recession was relevant for the capital structure of the sectors studied, with inflation only being significant for the health sector. The level of indebtedness of the basic materials sector was shown to be the most dependent on economic fluctuations and that of telephony and utilities was shown to be the least dependent. In addition, it was verified that the company-specific variables have greater relevance in determining capital structure compared to the macroeconomic ones.
Highlights
Vanessa Rodrigues dos Santos Cardoso & Marília Cordeiro PinheiroModern capital structure theory has its roots in the work of Modigliani and Miller (1958), who argue that the sources of financing are irrelevant to company value
With the aim of analyzing the effect of recession and of macroeconomic variables on the capital structure of the sectors of companies with shares traded on the B3, six hypotheses are formulated for empirical tests
The research hypotheses were built based on the traditional theories of capital structure, such that the expected relationship between the macroeconomic variables and the total level of indebtedness was determined by considering previous empirical studies
Summary
Modern capital structure theory has its roots in the work of Modigliani and Miller (1958), who argue that the sources of financing are irrelevant to company value. The theory was a benchmark in corporate finance as it gave rise to an enduring debate on the existence or not of an optimal capital structure. The academic production focused on qualitative models, with the aim of creating other theories that oppose or converge with that of Modigliani and Miller. The quantitative models have become dominant, and there is more focus on discovering factors that influence the costs of the sources of capital (Hackbarth, Miao, & Morellec, 2006). Among the factors that can alter a company’s average cost of capital weighted by its capital structure are macroeconomic variables, due to their direct relationship with the risk factor (Chen, 2010). At the same time in which banks face liquidity problems, companies are more wary of leveraging due to the concern about how indebtedness may be interpreted by the markets (Zeitun, Temimi, & Mimouni, 2017)
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