TITLE:
The Influence of Capital Concentration on Brazilian Non-Financial Public Companies’ Indebtedness Behavior
AUTHORS:
José Renato de Paula Souza Jardim, José Odálio dos Santos, Peter Vaz da Fonseca
KEYWORDS:
Corporate Governance, Ownership Structure and Capital Concentration
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.1,
February
15,
2022
ABSTRACT: One of the main financial
policies is related to the capital structure to be defined by the companies.
For this reason, studies related to factors determining the capital structure
have a high priority on the research agenda in finance area. This being so, the
proposal is to investigate whether the nature of the company’s shareholding control—family, foreign, state-owned—affects its capital structure. It is the first work that uses
real shareholding control. For the development of this research, the publicly
traded Brazilian companies listed in B3 are adopted as a sample. The analyzed
sample covers 128 Brazilian companies listed in B3, between 2010 and 2017,
excluding companies from the financial sector. It is necessary to study each
company report to discover last—and true—shareholding control (Reference
Forms). To verify the influence of the capital structure, regression models
with panel data are used (fixed effect and robustness). The results are
consistent with the expected ones: 1) the excessive concentration of family
capital impairs indebtedness, which, due to the control loss aversion, reduces
the financing by debt; 2) the concentration of foreign capital favors
companies’ indebtedness, as they have more efficient management, better access
to financing sources and better investment opportunities, and, 3) the
concentration of state capital favors indebtedness, since these companies are
of government’s interest to maximize the country’s development, and have low
capital costs arising from development banks.