How oil price uncertainty influences corporate capital structure: evidence from BRIC countries

This paper examines how corporate capital structures in emerging markets – Brazil, Russia, India, and China (BRIC) – were impacted by oil price uncertainty (OPU) from 2007 to 2019. We find that the relationship between OPU and firm leverage in BRIC markets is nonlinear and U-shaped. The extent to which OPU affects both short- and long-term leverage varies across nations. These findings are robust to endogeneity tests. Furthermore, while the OPU effect on corporate leverage is lessened in high-growth enterprises, it is strengthened in materials and energy companies. From an OPU perspective, this paper contributes intriguing knowledge of the corporate finance field.