Download The Determinants of the Capital Structure of Listed on Stock Market

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Rajan & Zingales (1995) conclude there is a negative relationship between growth
opportunities - these expressed by MTB - and the indebtedness, arguing that companies resort
to the issue of new shares to finance, especially when the company's market value is high
(overvalued company) and, thus, reduce the level of indebtedness.
To test the theory of market timing, we evaluate the following hypothesis:
H6 - The valuation of the stock market has a negative effect on indebtedness
Table 1 - Definition of independent variables and expected signs
The sample was constructed with support in the financial and market information available on
Thomson Datastream, where there is a extensive historical financial information. The initial
sample contains statistical data of 45 companies listed on Euronext Lisbon, with financial and
market information, during the period 2005-2012.
From the initial database, we excluded three companies of the financial sector and insurance
due to the specificity of their activity, accounting rules and type of debt and because a
company does not have complete information for at least six periods. In the end, remains a
sample of 41 non-financial listed companies, representing 11 industry sectors and 277
observations. Table 2 summarizes the statistical sample of the companies considered.