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Analysis of the Capital Structure of Ecuadorian Pharmaceutical Companies Impact of Covid-19 on Debt Levels

Abstract:

This paper analyses the variables influencing the capital structure of Ecuadorian pharmaceutical companies, which have experienced variations in their internal design in recent years, and evaluates the effect of the covid-19 pandemic on their debt levels. The leverage ratio is the proxy for capital structure with independent variables as growth, percentage of fixed assets (tangibility), profitability (ROA), firm size, and liquidity. Including a dichotomous variable to assess the effect of covid-19 in 2020. The panel data model helps to analyze the data varying across firms and years. The coefficients are estimated using the Pooled Ordinary Least Squares (POLS) method and the fixed-effects method. The results show that the profitability and liquidity variables are negatively correlated. While the growth, tangibility, and firm size variables are not statistically significant. During 2020 the covid-19 pandemic did not significantly influence the financial statements of the sector. In general, correct management of observed debt levels would allow the industry to face possible external shocks and not present payment problems in the short term.