The Choice of Capital Structure of BRICS' Companies

This research is dedicated to analysis of determinants of capital structure in BRICS companies. The data is extracted from Thomson reuters database, the final sample contains 7653 observations and presents an unbalanced panel. Applying econometric analysis, random effect models, fixed effect models and pool regressions were evaluated. With leverage as dependent variable, it was found out that it is positively correlated with collateral value of assets, growth, size of the firm and it is negatively influenced by profitability and non debt tax shield. Findings showed that the direction of the explanatory variables is consistent not only with theoretical expectations but also empirical findings of other researchers. The effect of determinants for BRICS companies in different countries included in union is the same. Operating in BRICS market, a company is prone to trade intensively with other BRICS companies. Application of methodology used in presented research can let compare whether capital structure of companies in other developing countries is familiar with capital structure of BRICS companies or firms operating in markets of developed countries.