Does the nature of large projects affect the financing decisions over the investment period ?

• Autor(a) principal: Brunaldi, Eduardo Ottoboni
• Data de Publicação: 2018
• Tipo de documento: Tese
• Idioma: eng
• Título da fonte: Biblioteca Digital de Teses e Dissertações da USP
• Texto Completo: http://www.teses.usp.br/teses/disponiveis/12/12139/tde-17012019-162941/
• topic: Capex; Capex; Capital de giro; Capital structure; Estrutura de capital; Pesquisa e desenvolvimento; Research and development; Working capital

We develop a theoretical model based on Tirole (2006) where the nature of large investments, namely capital expenditure, research and development and working capital, affects the financing choice during the investment period. We use a sample comprised by American companies in the 1980-2017 period. We employ several econometric and graphic analyses to test our hypotheses. Our results are robust and consistent with Trade-off Theory predictions. Our model\'s propositions are empirically verified for all cases: (i) In CAPEX projects, firms use equity to finance the initial stages and debt to finance the last stages; (ii) throughout the R&D investment period, firms decrease debt and use equity to finance the project. Additionally, for large working capital projects, we show that firms use internal resources in the initial periods and, then, switch the source to debt, aiming the reduction of the deviation from the target leverage.