INFLUENCE OF COVID-19 ON THE SPEED OF CAPITAL STRUCTURE ADJUSTMENT IN COMPANIES LISTED ON B3

Abstract

Nowadays, studies around capital structure have become famous in corporate finance, what once stood out most was located on the left part of the balance sheet, the assets, however over time companies' financing decisions have achieved notoriety and promoted the development of the theoretical framework on the topic. Therefore, the present work aims to understand the potential impacts of the pandemic, caused by the Covid-19 virus, within the scope of the speed of adjustment of the capital structure towards the optimal level considering the dynamic Trade Off theory. The analysis adopts the partial adjustment model in a dynamic panel data, using the Arellano-Bond and Blundell-Bond estimators, covering publicly traded companies listed on the Brazilian stock exchange and considering the period of 30 quarters, between the first quarter of 2016 and the second quarter of 2023, with the estimation window for the pandemic period comprising 9 quarters, from the first quarter of 2020 to the first quarter of 2022. The results obtained, based on the more effective Blundell-Bond model, detect a reduction from 11% to 7% of the adjustment speed during the health crisis period, thus indicating the influence of Covid-19 on the optimal debt policy of the companies in the sample. Therefore, this research contributes empirically to understanding the impacts of the pandemic on the way companies finance themselves.