Regulation, Renegotiation and Capital Structure: Theory and Evidence from Latin American Transport Concessions

29 Pages Posted: 20 Apr 2016

See all articles by Alexander Moore

Alexander Moore

World Bank

Stéphane Straub

University of Toulouse 1 - Toulouse School of Economics (TSE)

Jean-Jacques Dethier

World Bank

Date Written: October 1, 2013

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.

Keywords: Debt Markets, Emerging Markets, Bankruptcy and Resolution of Financial Distress, Banks & Banking Reform, Economic Theory & Research

Suggested Citation

Moore, Alexander and Straub, Stephane and Dethier, Jean-Jacques, Regulation, Renegotiation and Capital Structure: Theory and Evidence from Latin American Transport Concessions (October 1, 2013). World Bank Policy Research Working Paper No. 6646. Available at SSRN: https://ssrn.com/abstract=2337799

Alexander Moore (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Stephane Straub

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

21 Allée de Brienne
F-31042 Toulouse Cedex, 31000
France
05 61 12 85 37 (Phone)
05 61 12 85 38 (Fax)

Jean-Jacques Dethier

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/jdethier

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