Determinants of the Capital Structure of Small and Medium Sized Brazilian Enterprises
| Autor | Denis Forte - Lucas Ayres Barros - Wilson Toshiro Nakamura |
| Cargo | Universidade Presbiteriana Mackenzie, CCSA/UPM - Universidade de São Paulo, FEA/USP - Universidade Presbiteriana Mackenzie, CCSA/UPM |
Available online at
http://www.anpad.org.br/bar
BAR, Rio de Janeiro, v. 10, n. 3, art. 6,
pp. 347-369, July/Sept. 2013
Determinants of the Capital Structure of Small and Medium Sized
Brazilian Enterprises
Denis Forte
E-mail address: denisfortebr@yahoo.com.br
Universidade Presbiteriana Mackenzie – CCSA/UPM
Av. Angélica, 736, apto. 62, Santa Cecilia, 01228-000, São Paulo, SP, Brazil.
Lucas Ayres Barros
E-mail address: lucasayres@usp.br
Universidade de São Paulo – FEA/USP
Rua Alves Guimarães, 1133, apto. 62, Pinheiros, 05410-002, São Paulo, SP, Brazil.
Wilson Toshiro Nakamura
E-mail address: wtnakamura@uol.com.br
Universidade Presbiteriana Mackenzie – CCSA/UPM
Rua Correia de Lemos, 390, apto. 62, 04140-000, São Paulo, SP, Brazil.
Received 8 June 2012; received in revised form 21 February 2013 (this paper has been with the
authors for two revisions); accepted 4 March 2013; published online 1st July 2013.
Editor’s note. Ricardo Pereira Câmara Leal served as Associate Editor for this article.
D. Forte, L. A. Barros, W. T. Nakamura 348
BAR, Rio de Janeiro, v. 10, n. 3, art. 6, pp. 347-369, July/Sept. 2013 www.anpad.org.br/bar
Abstract
This research investigates the determinants of the capital structure of small and medium enterprises (SMEs)
using a unique database that includes over 19,000 Brazilian firms and spans 13 years of data. The econometric
analysis employs the System Generalized Method of Moments estimator (GMM-Sys) and two strong results
emerge: (a) profitability is negatively related to leverage, and (b) asset growth is positively related to leverage.
Both results are consistent with the pecking order theory of capital structure and suggest th at SMEs tend to
finance their expansion with debt only after exhausting their internal r esources. Additionally, we fin d weaker
evidence for the following: (a) size is positively related to leverage, which can be interpreted as evidence that
larger firms have more access to credit markets; (b) riskier SMEs tend to be less financially leveraged, consistent
with the bankruptcy cost arguments from trade-off th eories; and ( c) the age of t he firm is negatively related to
financial leverage, suggesting that older SMEs may be slightly more conservative in their financing choices.
Finally, the magnitude of the coefficient of lagged leverage shows the high persistence of this variable and is
compatible with the hypothesis that SMEs adjust their debt/equity ratio towards a target value, although at a low
speed.
Key words: small and medium enterprises (SMEs); capital structure; leverage; corporate finance.
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