Optimal financial structure in the food industry listed on the mexican stock exchange.

Abstract

This work investigates the firm-specific variables that effect the financial structure of the food industry listed don the Mexican Stock Exchange during the period 2000-2009. To this end, it develops an econometric model of panel data to identify these variables; this model shows that the tangible assets and profitability, are the main variables that are considered by the industry to make their funding decisions. This result is related to the trade-off theories, hierarchy of preferences and agency cots, which argue that companies with a higher proportion af tangible assets are more leveraged, as these can act as collateral assets and minimize conflicts interest between shareholders and creditor, as well as the asymmetry of information between these agents. This reduction of conflicts of interest and information asymmetry, so take the tax advantage of debt compared with the costs of financial distress lead to an optimal financial structure that tends to maximize the value of the company.