Regulation, renegotiation and capital structure: theory and evidence from Latin American transport concessions
Journal of Regulatory Economics(2014)
摘要
We examine the capital structure of regulated infrastructure firms. We develop a model showing that leverage, the ratio of liabilities to assets, is lower under high-powered regulation and that firms operating under high-powered regulation make proportionally larger reductions in leverage when the cost of debt increases. We test the predictions of the model using an original panel dataset of 124 transport concessions in Brazil, Chile, Colombia and Peru over 1992–2011. For each concession we have data on the regulatory regime, annual financial performance and contract renegotiations. We begin by demonstrating that, although pervasive, contract renegotiations do not fundamentally alter the regulatory regime. Importantly, firms are not systematically able to renegotiate when in financial difficulty, implying that price cap contracts remain high-powered in practice. We use this result for our main empirical work, where we find broad support for our theoretical predictions: when the cost of debt increases, firms operating under high-powered regulation make proportionally larger reductions in leverage.
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关键词
gdp deflator,market value,working capital,bond,capital structure,gdp,procurement,emerging markets,leverage,risk averse,capital ratio,emerging market,exposure,econometrics,return,market risk,income,variable rate,payoff,liquidity,income distribution,internal rate of return,shareholders,consumer surplus,debt,institutional investor,developing countries,volatility,benchmarking,latin america,consumers,corruption,cost of debt,productivity,transport,rate of return,capital,profitability,real gdp,inflation,regulator,insurance,corporate finance,political risk,capital markets,current assets,bankruptcy,dummy variable,return on assets,bond market,development economics,financial management,regulation,savings,capital asset
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