Determinants of the capital structure of brazilian industrial companies in the periods of prosperity and economic crisis

Abstract

The understanding of how organizations adapt to periods of the crisis has been little explored in the theme capital structure, opening research opportunities, especially in the Brazilian scenario that has recently run through one of its greatest economic recessions. This study aims to verify
the determinants of the capital structure of Brazilian industrial companies in periods of prosperity
and economic crisis. The sample includes 92 Brazilian publicly traded industrial companies, the
data extracted from the Economática® database and analyzed using statistical techniques, such
as panel data regression. As for the results, it has been initially that the organizations have been
more indebted in the period of crisis (2014 to 2016) compared to the previous one of economic
prosperity (2010 to 2013). In addition, linked to the main objective of the research, it has been
that the variables profitability, size, current liquidity, tangibility and market to book value have
been shown to be significant in at least one of the operational models. Among these, profitability
is highlighted, which in addition to having a greater influence on the way organizations structure
their capital, is the determinant that suffers the most oscillation in the comparison between the
periods, losing impact in the recession, since the ability of companies to generate resources is
reduced in negative times, making borrowing a necessary alternative for a large number of corporations.
These findings help managers and the academic community since the way companies
capture resources tends to impact the value and maintenance of the business market from a
long-term perspective.