CAPITAL STRUCTURE: LEVEL OF DEBT AND EBITDA – EVIDENCES OF THE BRAZILIAN MARKET

Abstract

The main aim of this study was to investigate the correlation between degree of Indebtedness and EBITDA. It was inspired by the theoretical construct formulated by Modigliani and Miller (1958) and later refuted by Durand (1959). In this case, we took as reference the thoughts of this last author whom perceive the indebtedness as a determining factor of company value. The longitudinal research used a sample of BM & FBOVESPA for the period 2000-2011, supported by the database of ECONOMÁTICA. The methodology employed the technique called panel data combined with Generalized Estimating Equations (GEE). The research hypothesis was refuted, then, no significant relation was found between the degree of indebtedness and EBITDA. This work helps to fill an important gap in Brazilian literature, as it investigates this relationship in a new theoretical perspective. In the practical field, it tends to provide subsidies to shareholders and potential investors interested in the safety and return of their investments.