Regulation, Renegotiation and Capital Structure [electronic resource] : Theory and Evidence from Latin American Transport Concessions / Moore, Alexander
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TextPublication details: Washington, D.C., The World Bank, 2013Description: 1 online resource (29 p.)Subject(s): Bankruptcy and Resolution of Financial Distress | Banks & Banking Reform | Capital | Debt Markets | Economic Theory & Research | Emerging Markets | Infrastructure | Leverage | Macroeconomics and Economic Growth | Regulation | Latin AmericaAdditional physical formats: Moore, Alexander: Regulation, Renegotiation and Capital Structure.Online resources: Click here to access online Abstract: The paper examines the capital structure of regulated infrastructure firms. The authors 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. They test the predictions of the model using an original panel dataset of 124 transport concessions in Brazil, Chile, Colombia and Peru over 1992-2011, finding broad support for our predictions.
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The paper examines the capital structure of regulated infrastructure firms. The authors 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. They test the predictions of the model using an original panel dataset of 124 transport concessions in Brazil, Chile, Colombia and Peru over 1992-2011, finding broad support for our predictions.
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