The world financial crisis and the international financing of Brazilian companies

Abstract

The world financial crisis initiated in 2008 may have affected the international financing mix of firms in Brazil and their determinants, given its aftereffects. Financial crisis are recurrent events with varying degrees of severity. Many public Brazilian firms use international financing in their capital structure mix and it is relevant to understand their behavior during international crises. Thus, our goal was to investigate the foreign financing mixes of Brazilian listed companies before (2004) and during the 2008 world financial crisis by means of descriptive and probit regression analyses of their components and determinants at the end of these years. Brazilian companies usage of Eurobonds fluctuates with the value of the real (R$) and is still small considering the size of Brazil's economy. Short-term financing and bank loans, domestic and foreign, decreased in 2008 and were replaced by domestic and international bonds and American Depository Receipts (ADRs). Firms with foreign shareholders more often resorted to foreign capital markets and their presence became a more important determinant in 2008, while the other determinants did not change. Firms that employ international debt tend to use all other sources of financing more often. International bank loans may be the first step to reduce international financing constraints.

Financing of Brazilian Companies During Financial Crises: Comparative Between the Crises of 2002, 2008 and 2015

“…The authors found that, in times of instability, companies increase their indebtedness, mainly due to the greater sensitivity of the debt to exchange rate variables. Carvalhal and Leal (2013) investigated the determinants of the capital structure of Brazilian companies before and after the 2008 financial crisis. According to the authors, the effects of the 2008 crisis on Brazilian companies resulted in a fall in short-term debt, particularly bank debts, although the companies' capital structure has remained stable.…”

“…According to the authors, the bank acts in a compensatory manner in relation to the rest of the financial system, increasing its disbursements in times of crisis, when bank financing becomes undermined. That said, Lima, Assaf Neto, Perera, and Silva et al(2011) highlighted the increase in corporate debt in the 2008 crisis, whereas Carvalhal and Leal (2013) and Silva, Santos, Perobelli, and Nakamura (2016) showed evidence of the increased share of long-term debt in the crisis.…”

Are Competitive Positioning and Quality of Administration Related to the Continuity?

“…In times of financial adversity, when the funding sources become scarcer, the quality of corporate governance becomes a relevant factor to search and access new sources of resources (Carvalhal & Leal, 2013). In addition, due this kind of situation, companies that adopt conducts according to corporative governance can present higher chances of access, contributing to conserve its continuity.…”

O impacto da crise financeira internacional de 2008 sobre a estrutura de capital das empresas de países desenvolvidos e emergentes

“…Complementarmente, algumas pesquisas recentes também têm demonstrado haver diferenças nos fatores determinantes da decisão de estrutura de capital nas empresas de países desenvolvidos e em desenvolvimento nos momentos de crise em relação a períodos de estabilidade financeira (e.g. DAS;DAS;LIM, 2009;DRIFFIELD;PAL, 2010;CARVALHAL;LEAL, 2013;MOKHOVA;ZINECKER, 2014;HARRISON;WIDJAJA 2014). No entanto, Harrison e Widjaja (2014), mostram que existe uma lacuna teórica a ser explorada neste campo de estudo.…”