INVESTMENT, PROFITABILITY AND INDEBTEDNESS: WHAT HAS FINANCED THE GROWTH OF BRAZILIAN COMPANIES AFTER THE REAL PLAN ?

Abstract

A company’s capital structure is one of the main factors influencing its investment projects, the latter being the real driving forces behind a country’s economical expansion. In this context, this paper aims at analyzing the investment and financing decisions made by Brazilian companies after the Real Plan, with a view to identifying the types and amounts of application of resources, as well as the sources employed to supply them. To this end, the financial statements of companies with stocks listed on BOVESPA in the period 1995-2002 were analyzed, both in global terms and sectorial segmentation, from ANOVA tables. The findings suggest that investments of Brazilian companies, on average, were below the inflation ratios of the period, being that this growth is not aimed at fixed assets. The evidence is that there are major difficulties to supply these investments with self-financing or external sources of resources, such as stock or debt issues. Unencumbered liabilities, both of short and long-term, are preferably used instead. Finally, there have been statistically significant differences for indebtedness among the sectors researched, which matches international evidences on this regard.