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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

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