MANAGEMENT OF CORPORATE DEBT DEADLINES: A LOOK AT PUBLICLY TRADED COMPANIES IN BRAZIL

Santos, João Daniel Azevedo dos; Bortoluzzo, Adriana Bruscato; Gonçalves, Adalto Barbaceia

doi:10.1590/S0034-759020230603

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Brasil

Revista de Administração de Empresas

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ARTICLES • Rev. adm. empres. 63 (6) • 2023 • https://doi.org/10.1590/S0034-759020230603 copy

MANAGEMENT OF CORPORATE DEBT DEADLINES: A LOOK AT PUBLICLY TRADED COMPANIES IN BRAZIL

Gestión de los plazos de la deuda corporativa: Una mirada a las empresas que cotizan en bolsa en Brasil

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

This study investigates the maturity structure of listed non-financial Brazilian companies from 2010 to 2019 and reveals that these companies do not spread their debt maturities upon renewal, unlike the results observed by Choi et al. (2018)Choi, J., Hackbarth, D., & Zechner, J. (2018). Corporate debt maturity profiles. Journal of Financial Economics, 130(3), 484-502. https://doi.org/10.1016/j.jfineco.2018.07.009
https://doi.org/10.1016/j.jfineco.2018.0... for US firms. Even after the rollover shock in 2015 where the Brazilian sovereign debt’s investment were downgraded, these firms did not increase the maturity spread of their debt. In addition, the research evaluated corporate debt management by utilizing Brazil’s downgrade as a “quasi-natural experiment” in the exogenous shock model. The results indicate that Brazilian companies may face considerable debt rollover risks due to the concentration of maturities in specific maturity ranges during future credit shocks. Proper control of financing structures is crucial to ensure that companies remain resilient and do not have to turn down profitable investments or high-quality assets during financial crises. This research has significant implications for corporate practice and the associated risks of financing profitable projects, particularly in countries with less efficient capital markets.

Keywords:
Capital structure; debt profile management; rollover risk; quasi-natural experiment; monetary policy

Variable	Mean	Standard deviation	1^st quartile	Median	3^rd quartile	n
Nodm	4.21	2.82	1.00	6.00	7.00	2,509
Nissued	2.60	2.16	1.00	2.00	5.00	2,509
I_it j=1	0.056	0.20	0	0	0.036	2,509
I_it j=2	0.025	0.09	0	0	0.015	2,509
I_it j=3	0.012	0.03	0	0	0.009	2,509
I_it j=4	0.010	0.02	0	0	0.009	2,509
I_it j=5	0.007	0.02	0	0	0.004	2,509
I_it j=6	0.005	0.02	0	0	0	2,509
I_it j=7	0.016	0.04	0	0	0.008	2,509
m_it j=1	0.148	0.60	0.04	0.08	0.15	2,509
m_it j=2	0.058	0.11	0	0.02	0.08	2,509
m_it j=3	0.034	0.05	0	0.01	0.05	2,509
m_it j=4	0.027	0.04	0	0.01	0.04	2,509
m_it j=5	0.019	0.03	0	0.01	0.03	2,509
m_it j=6	0.015	0.03	0	0	0.02	2,509
m_it j=7	0.045	0.11	0	0	0.05	2,509
STD	0.39	0.28	0.16	0.33	0.55	765
LTD	0.61	0.28	0.45	0.67	0.84	765
Duration	2.88	1.35	1.89	2.8	3.9	813
TD	0.55	2.58	0.16	0.32	0.45	813
Cash	0.12	0.11	0.03	0.09	0.16	813
BondPct	0.24	0.29	0	0.10	0.42	813
TLPct	0.48	0.36	0.13	0.46	0.80	813
MtB	1.39	8.08	0.29	0.82	1.86	622
Size	7.64	2.04	6.54	7.82	8.92	813
Debt/EBITDA	4.07	7.65	0.68	2.2	4.14	662
Profitability	0.03	1.52	0	0.05	0.09	813
CAPEX	0.25	0.24	0.03	0.21	0.39	813

	Dependent Variable
	I_it j=1	I_it j=2	I_it j=3	I_it j=4	I_it j=5	I_it j=6	I_it j=7
m_it j=1	0.001	-0.001	0.0001	-0.001	-0.002	-0.0004	-0.001
	(0.018)	(0.001)	(0.0004)	(0.001)	(0.001)	(0.0004)	(0.001)
m_it j=2	-0.393^* ***** ,	0.329^* ***** ,	-0.008	-0.007	-0.007	-0.006	0.009
	(0.065)	(0.088)	(0.011)	(0.006)	(0.005)	(0.005)	(0.009)
m_it j=3	-0.462^* ***** ,	0.035	0.431^* ***** ,	-0.001	-0.018	-0.025^* * denote statistical significance at 0.1%, 1%, and 5%, respectively.	0.034
	(0.058)	(0.068)	(0.033)	(0.027)	(0.017)	(0.011)	(0.028)
m_it j=4	-0.370^* ***** ,	-0.023	-0.036	0.439^* ***** ,	-0.005	0.011	-0.005
	(0.109)	(0.031)	(0.027)	(0.062)	(0.023)	(0.017)	(0.036)
m_it j=5	-0.207	-0.137^* ***** ,	-0.105^* ***** ,	-0.092^* * denote statistical significance at 0.1%, 1%, and 5%, respectively.	0.336^* ***** ,	-0.018	0.044
	(0.123)	(0.052)	(0.028)	(0.042)	(0.046)	(0.032)	(0.042)
m_it j=6	0.042	0.005	-0.025	0.003	0.062	0.372^* ***** ,	-0.161^* ***** ,
	(0.185)	(0.066)	(0.035)	(0.048)	(0.051)	(0.072)	(0.037)
m_it j=7	-0.179^ and	0.003	-0.010	-0.025^* * denote statistical significance at 0.1%, 1%, and 5%, respectively.	-0.031^ and	-0.035^* ***** ,	0.162^ and
	(0.059)	(0.014)	(0.007)	(0.011)	(0.011)	(0.010)	(0.058)
n	2509	2509	2509	2509	2509	2509	2509
R²	0.124	0.147	0.327	0.318	0.253	0.265	0.130

	Mean		T-Test
Variable	Treated	Controlled	t	p-value
Duration	2.253	3.738	-11.35	<0.001
TD	0.298	0.328	-1.650	0.103
Cash	0.127	0.126	0.060	0.952
BondPct	0.226	0.292	-2.450	0.015
TLPct	0.520	0.497	0.750	0.451
Nodm	5.275	5.787	-2.240	0.026
MtB	1.827	2.074	-1.160	0.247
Size	7.933	8.616	-4.990	< 0.01
Debt/EBITDA	2.861	2.714	0.340	0.735
Profitability	0.070	0.079	-1.860	0.084
CAPEX	0.238	0.229	0.410	0.679
Pseudo R² = 0.051

Variable	Model 1		Model 2		Model 3		Model 4		Model 5		Model 6
Event^* * denote statistical significance at 1%, 5%, and 10%, respectively. Treatment	-0.544	^ and	-0.474	^* ***** ,	-0.465	^ and	-0.472	^* ***** ,	-0.389	^* ***** ,	-0.386	^* ***** ,
	(0.267)		(0.139)		(0.280)		(0.147)		(0.146)		(0.154)
Event	1.816	^* ***** ,	0.306	^* ***** ,	1.790	^* ***** ,	0.268	^* ***** ,	0.2679	^* ***** ,	0.2294	^ and
Event	(0.194)		(0.114)		(0.205)		(0.119)		(0.113)		(0.121)
Treatment	-0.416		-0.157		-0.416		-0.170		-0.082		-0.094
Treatment	(0.275)		(0.183)		(0.275)		(0.184)		(0.189)		(0.189)
Treatment^* * denote statistical significance at 1%, 5%, and 10%, respectively. Downgrade					-0.616		0.103		-0.616		0.0978
					(0.562)		(0.322)		(0.562)		(0.322)
Downgrade					0.135		0.160		0.135		0.1628
Downgrade					(0.343)		(0.193)		(0.343)		(0.192)
Duration									0.1239	^ and	0.1249	^ and
Duration									(0.058)		(0.059)
Intercept	2.940	^* ***** ,	0.710		2.937	^* ***** ,	0.770		0.5837		0.6503
Intercept	(0.201)		(0.481)		(0.199)		(0.485)		(0.199)		(0.485)
Company effect	Yes		Yes		Yes		Yes		Yes		Yes
Controls	No		Yes		No		Yes		No		Yes
R2	0.22		0.70		0.22		0.71		0.70		0.70

Variable	Model 1		Model 2		Model 3		Model 4
Event^*Treatment	-0.727	^***	-0.677	^***	-0.682	^***	-0.676	^***
Event^*Treatment	(0.183)		(0.107)		(0.191)		(0.113)
Event	1.299	^***	0.287	^***	1.301	^***	0.289	^***
Event	(0.133)		(0.087)		(0.140)		(0.092)
Treatment	-0.856	^***	-0.600	^***	-0.856	^***	-0.599	^***
Treatment	(0.188)		(0.134)		(0.189)		(0.135)
Treatment^*Downgrade					-0.418		-0.016
Treatment^*Downgrade					(0.384)		(0.244)
Downgrade					-0.008		-0.007
Downgrade					(0.235)		(0.146)
Intercept	2.722	^***	0.578		2.722	^***	0.572
Intercept	(0.137)		(0.371)		(0.137)		(0.375)
Company effect	Yes		Yes		Yes		Yes
Time effect	Yes		Yes		Yes		Yes
Controls	No		Yes		No		Yes
R2	0.37		0.73		0.37		0.73

Fundação Getulio Vargas, Escola de Administração de Empresas de S.Paulo Av 9 de Julho, 2029, 01313-902 S. Paulo - SP Brasil, Tel.: (55 11) 3799-7999, Fax: (55 11) 3799-7871 - São Paulo - SP - Brazil
E-mail: rae@fgv.br

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