10.5354/0719-0816.2001.56759

Abstract

The objective of this article is to analyze the determinants of the financial leverage of a sample of Latin American companies that issued ADRs. This constitutes the first study in this area. We consider a sample of thirty-two public firms that issued ADRs in NYSE market during 1990-1994. According to the model proposed by Rajan and Zingales (1995) we find similar results in three of the four variables explored by these authors. Our results show a negative relationship between growth opportunities and leverage. Secondly, there is a positive relation between size of the company and leverage. Furthermore, profitability is negatively related to leverage. Finally, tangibility shows to be statistically significant but with an unexpected negative relationship with the leverage. This last result is not consistent with previous evidence in the corporate finance literature.