Determinants of indebtedness of Brazilian companies listed in B3 with and without insolvency risk

Purpose – The objective of this paper is to identify and analyze if there are differences in the determinants of the capital structure of companies listed in B3 (Brazil, Stock exchange, Over-The-Counter), with and without risk bankruptcy. Design/methodology/approach – We used the bankruptcy prediction index (Z2) of Altman, Baidya and Dias (1979) to separate companies with and without risk of bankruptcy, in addition to the multiple regression model estimated by OLS, in a sample consisting of 233 companies. The data used are secondary, of annual periodicity, obtained from financial statements taken from the Quantum Axis database, covering the period from 2011 to 2016. Findings – We concluded that there is a difference in the determinants of indebtedness between companies with and without risk of bankruptcy. Companies with risk of bankruptcy present a positive relationship between long-term and total indebtedness, and profitability and risk. Healthy companies, long-term and total debt presented negative relation with profitability, and positive with risk and size. Research limitations/implications – The limitation of this study is that it applies only to the companies investigated, so it is not possible to make generalizations. Originality/value – As a whole, the evidence found corroborates the pecking order hypothesis, according to which the first source of funds to finance investments is retained earnings, in the assessment of the capital structure of healthy companies than in relation to companies at risk of bankruptcy. Thus, the research's contribution is in the empirical field, providing new evidence for a very controversial topic in finance theory.