Business, Management and Accounting
4 years ago

Latin American firms face stronger financial constraints post-crisis, favoring big corporations.

Documentos de Trabajo
Corporate Leverage, the Cost of Capital, and the Financial Crisis in Latin America
Ricardo Bebczuk, Arturo Galindo

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The study looked at data from 185 companies in Latin America from 1993 to 2009. They found that companies with more assets, bigger size, and higher market value tend to have more debt. Profitability of a company is linked to how much debt it has. During the financial crisis, big companies were favored, and the relationship between assets, debt, and profits became stronger. Financial problems did not get worse for these companies during the crisis.