Capital Structure Analysis of EBXGroup's Companies: Combining Theory and Practice

According to market timing theory, companies tend to issue stocks or debts to take advantage of opportunity windows, and this behavior is a significant determinant in company capital structure. Based on this assertion and on recent evidence found on the Brazilian market, this paper seeks to analyze the market timing behavior of the six publicly-traded companies of the EBX Group (MPX, MMX, OGX, LLX, OSX and CCX), up to mid-2013. For this purpose, the methodology used was that of a case study and as the main source of data, the indicators related to capital structure and the stock market. An econometric approach using a fixed effects estimator for panel data was also inserted. The results show that the financial decisions made by managers in the EBX Group indicate attempts to exploit the opportunity windows related to the stock market, mainly measured by Sheller's price-to-earnings ratio (Sheller PE), an aggregate market index, as well as the market-to-book ratio(M/B) of each company analyzed. This paper contributes to the discussion about market timing in Brazil, combining theory and practice in an intuitive and dynamic way, as well as brings aspects related to companies and market conditions.