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Capital Structure Decisions and the Interaction with Payout and Ownership Decisions: Evidence from Brazil

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  • Antonio Zoratto Sanvicente

Abstract

The objective of this paper is to correct the analysis in most of the existing Brazilian literature on determinants of capital structure, which fails to consider the interaction of debt, payout and ownership policy decisions. With the estimation of a three-equation system by three-stage least squares, the paper obtains significant results, and its results contradict most of those obtained in the Brazilian literature. In addition, it confirms unambiguously the existence of an entrenchment effect in the agency relationship involving controlling and minority shareholders.

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  • Antonio Zoratto Sanvicente, 2011. "Capital Structure Decisions and the Interaction with Payout and Ownership Decisions: Evidence from Brazil," Business and Economics Working Papers 140, Unidade de Negocios e Economia, Insper.
    • Handle: RePEc:aap:wpaper:140
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    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
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