National and Industry Determinants of Capital Structure in Latin America

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Henrique Castro Martins
Paulo Renato Soares Terra


This study identified the role of the national environment (the Macroeconomy, Financial Development and Institutional Quality) and industry characteristics (Munificence, Dynamism, Concentration, Life Cycle, Technological Efficiency Dispersion, Product Quality Dispersion, Customer Bargaining Power and Supplier Bargaining Power) on debt of 612 listed companies from 7 Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela). For comparison purposes, the analysis is also extended to 847 U.S. companies. The period of study is 1996-2009 and the analysis employed a Hierarchical Linear Model, which controls the effects according to the level of the variables (country, industry, time and firm). The results suggest that Financial Development eases access to external funds and Institutional Quality is negatively related to firm Leverage. The research also finds evidence that institutional quality can promote asymmetrical development between stock markets and credit markets.


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Martins, H. C., & Terra, P. R. S. (1). National and Industry Determinants of Capital Structure in Latin America. Journal of Contemporary Administration, 18(5), 577-597.