TY - JOUR
T1 - Ownership and capital structure in Latin America
AU - Céspedes, Jacelly
AU - González, Maximiliano
AU - Molina, Carlos A.
PY - 2010/3
Y1 - 2010/3
N2 - This study evaluates the capital-structure determinants of Latin American firms using a comprehensive sample covering seven countries. Firms in the region have debt levels similar to those of U.S. firms, which is puzzling, given that Latin American firms experience relatively lower tax benefits and higher bankruptcy costs. This study argues that ownership-concentrated firms avoid issuing equity because they do not want to share control rights. Latin American firms have high ownership concentration, which creates an ideal setting to study how ownership concentration explains firms' capital structure. Consistent with the control argument, this study finds a positive relation between leverage and ownership concentration, when losing control becomes an issue. Also, the study shows a positive relation between leverage and growth. In addition, the study reports that other determinants that do not proxy for control rights are consistent with previous findings. Firms that are larger, have more tangible assets, and are less profitable are also more leveraged.
AB - This study evaluates the capital-structure determinants of Latin American firms using a comprehensive sample covering seven countries. Firms in the region have debt levels similar to those of U.S. firms, which is puzzling, given that Latin American firms experience relatively lower tax benefits and higher bankruptcy costs. This study argues that ownership-concentrated firms avoid issuing equity because they do not want to share control rights. Latin American firms have high ownership concentration, which creates an ideal setting to study how ownership concentration explains firms' capital structure. Consistent with the control argument, this study finds a positive relation between leverage and ownership concentration, when losing control becomes an issue. Also, the study shows a positive relation between leverage and growth. In addition, the study reports that other determinants that do not proxy for control rights are consistent with previous findings. Firms that are larger, have more tangible assets, and are less profitable are also more leveraged.
KW - Capital structure
KW - Emerging markets
KW - Latin America
KW - Ownership control
UR - http://www.scopus.com/inward/record.url?scp=76549134741&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=76549134741&partnerID=8YFLogxK
U2 - 10.1016/j.jbusres.2009.03.010
DO - 10.1016/j.jbusres.2009.03.010
M3 - Article
AN - SCOPUS:76549134741
SN - 0148-2963
VL - 63
SP - 248
EP - 254
JO - Journal of Business Research
JF - Journal of Business Research
IS - 3
ER -