Economics at your fingertips  

Market Timing and Pecking Order Theory in Latin America

Francisco Javier Vásquez Tejos () and Hernán Marcelo Pape Larre ()

Revista Finanzas y Politica Economica, 2021, vol. 13, issue 2, 345-370

Abstract: This article aims to determine if the capital structure of Latin American companies in the emerging markets of Brazil, Chile, Mexico, and Peru, are managed according to the market timing theory or the pecking order theory. The analysis was based on a non-probabilistic sample of 170 companies, with annual data, from an unbalanced panel, in the period 2010-2018. Regressions were applied with the fixed and random effects method. The results do not show significant evidence indicating that Latin American companies comply with the pecking order theory. Furthermore, there is also no definitive evidence that companies benefit from low share prices to issue capital or from debt issuance in the face of high stock market prices. There are signs that they follow a blend of several theories, which would indicate their characteristics in the capital structure of Latin American companies.

Keywords: Capital structure; Market timing theory; Pecking order theory; Latin america; Mexico; Perú; Brasil; Chile (search for similar items in EconPapers)
JEL-codes: G10 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Revista Finanzas y Politica Economica from Universidad Católica de Colombia
Bibliographic data for series maintained by Universidad Católica de Colombia ().

Page updated 2022-04-27
Handle: RePEc:col:000443:019739