Information assimetry versus capital structure: a comparative study between Brazilian and North American companies

Abstract

The capital structure has been studied since the mid-1950s, and has gone through several decades of study approaches. One of them is the one that analyzes the influence of information asymmetry on the capital structure of organizations, as discussed by Myers (1984) and Myers and Majluf (1984). Therefore, in order to verify the influence of the asymmetry on the capital structure of the Brazilian and North American companies from 2011 to 2015, a panel data analysis was performed with segregated samples, modeling variables related to information asymmetry for verification whether or not they influenced the indebtedness of the companies analyzed. As main results, it was initially verified that most of the coefficients associated to the modeled variables were statistically significant, but with low explanatory power, given the reduced coefficient returned in the regression. In addition, it was found that for both Brazilian and US firms, the variables related to information asymmetry were determinants of corporate indebtedness, however, with signs not always in line with what was expected by the pecking-order theory. Finally, it was concluded that the pecking-order theory is the one that offered the best explanatory set for the indebtedness of US companies, whereas for Brazilian companies it seems to be a mix of pecking-order and trade-off theory which offers the best explanation for the indebtedness of the companies analyzed.