IDEAS home Printed from https://ideas.repec.org/a/eme/jfeppp/v1y2009i3p264-275.html
   My bibliography  Save this article

Firms' capital structure and the bankruptcy law design

Author

Listed:
  • Bruno Funchal
  • Mateus Clovis

Abstract

Purpose - The purpose of this paper is to study the effect of changes in creditors' priority defined by the bankruptcy law on firms' capital structure. Design/methodology/approach - Taking advantage of the Brazilian bankruptcy law reform as an experiment and using publicly traded firms' balance sheet data, it compares Brazilian firms capital structure before and after the new law, using fixed-effects panel regression. The empirical results are in line with theories that predict the effects on the capital structure due to changes in creditors' expectations. Findings - This paper finds evidence of an increase in the debt portion of the capital structure. Originality/value - The paper contributes the law and finance empirical literature, pointing out that change in creditors' protection induces significant changes in the firms' financing policy.

Suggested Citation

  • Bruno Funchal & Mateus Clovis, 2009. "Firms' capital structure and the bankruptcy law design," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 1(3), pages 264-275, July.
  • Handle: RePEc:eme:jfeppp:v:1:y:2009:i:3:p:264-275
    as

    Download full text from publisher

    File URL: http://www.emeraldinsight.com/10.1108/17576380911041737?utm_campaign=RePEc&WT.mc_id=RePEc
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jfeppp:v:1:y:2009:i:3:p:264-275. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman). General contact details of provider: http://www.emeraldinsight.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.