Theory and practice of corporate finance: Evidence and distinctive features in Latin America

Carlos P. Maquieira, Lorenzo A. Preve and Virginia Sarria-Allende

Emerging Markets Review, 2012, vol. 13, issue 2, 118-148

Abstract: We survey 290 LATAM firms on capital budgeting, cost of capital and capital structure issues. We analyze the results and compare them to those of other studies. We interpret differences according to special features characterizing both emerging markets and SME. We observe that LATAM firms make use of standard capital budgeting techniques, but give special weight to liquidity and capital rationing considerations. They rely less on cost of capital formal estimations; rather, they use investors' requests as their primordial input. Finally, surveyed firms are less leveraged, and inclined toward stressing the role of internal financing and minimizing payment commitments.

Keywords: Corporate finance; Emerging markets; Capital budgeting; Cost of capital; Capital structure; Survey (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:13:y:2012:i:2:p:118-148

DOI: 10.1016/j.ememar.2011.11.001

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