Banca de DEFESA: LUCAS FAILLACE CASTELO BRANCO

PROFITABILITY AND TAX INDEBTEDNESS OF COMPANIES B3 INDUSTRIAL GOODS SECTOR

Capital Structure. Tax Debt. Long-Term Tax Liabilities. Return on Assets (ROA). Return on Equity (ROE).

The capital structure refers to the relationship between equity and debt that maximizes the value of the company, assuming that there is an association between leverage and profitability. Various theories seek to explain this association, including the theory of tax advantage. The theory of tax advantage suggests that there are benefits to debt due to the deductibility of interest on third-party capital. This theory has been expanded in Brazil to also consider the benefits of deductibility of interest on equity, which is peculiar to the Brazilian reality. With a focus on the deductibility of interest, whether on equity or third-party capital, the theory of tax advantage can be further expanded. Non-empirical studies show that companies in Brazil choose to postpone tax payments as much as possible, which implies cash availability and the needlessness for (more) loans. These cash resources can then be used to finance the company's activities. This research aimed to verify the effects of long-term tax liabilities, considering IRPJ and CSLL, on the profitability of companies, measured by ROA and ROE, thus formulating two research hypotheses. Data were collected from the Economática platform of the industrial goods sector of B3 from 2014 to 2019 to test the research hypotheses. The Ordinary Least Squares (OLS) method was used with an unbalanced panel. The obtained results did not confirm the research hypotheses, which stated that companies with higher long-term tax liabilities have higher profitability measured by ROA and ROE. The use of OLS with an unbalanced panel may have led to a loss of efficiency in the OLS estimator, suggesting the use of specific methods for unbalanced panels, such as the Generalized Method of Moments (GMM) estimator or the random effects model in future research. The findings and considerations of this study provide guidance for the improvement of future research.