IDEAS home Printed from
   My bibliography  Save this article

Determinants of leverage in mining companies, empirical evidence for Latin American countries


  • Angélica Paredes Gómez

    (Instituto Politécnico Nacional, México)

  • Gerardo Ángeles Castro

    () (Instituto Politécnico Nacional, México)

  • Miguel Flores Ortega

    (Instituto Politécnico Nacional, México)


This paper applies static and dynamic panel data methods to explore the determinants and the trend of leverage across 14 mining firms in Mexico, Colombia, Chile, Brazil and Peru from the first quarter in 2004 to the third quarter in 2014, and also contrasts the results with relevant theories. We find that tangibility increases leverage, while growth and size do not have significant effect. Profitability reduces leverage, which is consistent with the first alternative of the Hierarchical Order theory. The Colombian firms start with lower levels of leverage and reduce it as tangibility, size, growth and profitability increase and hence, these firms are more financially stable, and their performance, in particular, is consistent with the first alternative of the Hierarchical Order theory. Lagged values of leverage are more robust determinants of present values of leverage than the other explanatory variables.

Suggested Citation

  • Angélica Paredes Gómez & Gerardo Ángeles Castro & Miguel Flores Ortega, 2016. "Determinants of leverage in mining companies, empirical evidence for Latin American countries," Contaduría y Administración, Accounting and Management, vol. 61(1), pages 26-40, Enero-Mar.
  • Handle: RePEc:nax:conyad:v:61:y:2016:i:1:p:26-40

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Gainer, Brenda & Padanyi, Paulette, 2005. "The relationship between market-oriented activities and market-oriented culture: implications for the development of market orientation in nonprofit service organizations," Journal of Business Research, Elsevier, vol. 58(6), pages 854-862, June.
    2. Coltman, Tim & Devinney, Timothy M. & Midgley, David F. & Venaik, Sunil, 2008. "Formative versus reflective measurement models: Two applications of formative measurement," Journal of Business Research, Elsevier, vol. 61(12), pages 1250-1262, December.
    3. Jarvis, Cheryl Burke & MacKenzie, Scott B & Podsakoff, Philip M, 2003. " A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research," Journal of Consumer Research, Oxford University Press, vol. 30(2), pages 199-218, September.
    4. Ruiz, David Martín & Gremler, Dwayne D. & Washburn, Judith H. & Carrión, Gabriel Cepeda, 2008. "Service value revisited: Specifying a higher-order, formative measure," Journal of Business Research, Elsevier, vol. 61(12), pages 1278-1291, December.
    5. Franke, George R. & Preacher, Kristopher J. & Rigdon, Edward E., 2008. "Proportional structural effects of formative indicators," Journal of Business Research, Elsevier, vol. 61(12), pages 1229-1237, December.
    Full references (including those not matched with items on IDEAS)


    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:nax:conyad:v:61:y:2016:i:1:p:26-40. 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: (Alberto García-Narvaez (Technical Editor)). General contact details of provider: .

    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.