The Volatility of Capital Structure in Brazil—An Empirical Analysis

Abstract

The capital structure has been studied consistently since 1952. The volatility of the structures of capital is recent, where the static trade-off theory is questioned, DeAngelo & Roll (2015). It followed this idea, and not only the study of determinants between companies. The aim of this article is to answer if the Brazilian companies are unstable in terms of structure capital and not an exception, and subsequently identify the impact of the volatility of capital structures, profitability, size, sector of activity, etc. 625 non-financial companies were analyzed, from 2003 to 2016, listed on the Brazilian Stock Exchange with models dynamic and static. The results conclude that the capital structures in Brazil are volatile, and that there was not profitability in the companies, even though they had increased their debts.