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The effects of privatizationon the capital structure of Brazilian firms

Author

Listed:
  • Cinthia Barbosa
  • Cristiano Machado Costa

    (FUCAPE Business School)

  • Bruno Funchal

    (FUCAPE Business School)

Abstract

This article investigates the effects of privatization under Brazil's National Privatization Program during the 1990s on companies' capital structure. Our model suggests that privatized firms increased their market leverage by 10 to 14% on average relative to the level before privatization. The effect of privatization on book leverage level was 8 to 12% on average. These results indicate a positive effect of the privatization process on the levels of leverage of privatized firms, as predicted by signalling and agency theories.

Suggested Citation

  • Cinthia Barbosa & Cristiano Machado Costa & Bruno Funchal, 2011. "The effects of privatizationon the capital structure of Brazilian firms," Fucape Working Papers 32, Fucape Business School.
    • Handle: RePEc:bbz:fcpwps:32
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    File URL: http://www.fucape.br/_public/workingpapers/32-2011.pdf
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