CAPITAL STRUCTURES OF EXPORTING COMPANIES FOR THE EXTRA EUROPEAN UNION MARKET

Abstract

This paper aims to identify some of the factors that influence the capital structure of Portuguese exporting companies to the extra EU market and to verify whether there are differences in relation to the determinants of the capital structure of exporting companies to the EU market, based on the results of another study done in 2020. For this purpose, we used a sample consisting on the 250 largest Portuguese exporting companies to the extra EU market and economic and financial data of the year 2018. The independent variables used to identify the determinants of total liabilities, long-term and short-term liabilities were the financial leverage, the effective tax rate, the other tax benefits, the cost of financing, the business risk, the size, the collateral, the reputation, the intangible assets, profitability, growth rate and type of industry. In terms of the results obtained, it is possible to conclude that the variables that most influence the capital structure of Portuguese exporting companies to the extra EU market were the effective tax rate, financial costs, business risk, size, collateral, intangible assets and profitability. With regard to the comparison between exporting companies to the EU and extra-EU market, it appears that in companies operating in the European Union, variables such as business risk, size and intangible assets were not relevant. On the other hand, these companies, presented reputation and industry characteristics as relevant variables, while in the current study they are not significant. Finally, it was found that the effective tax rate was relevant for both types of companies, although with an inverse relationship with the level of indebtedness. Such results show different determinants of capital structures, depending on the target market in which companies operate.