The role of exchange rate regime and trade liberalization in corporate behavior

Chapter 2 displays the macroeconomic environment and shows the data that will be used throughout this dissertation. The chapter takes a first look at the main changes in corporate financial policies across the different exchange rate regimes and at the main cross-sectional determinants of companies' foreign borrowing and hedging activities.; Chapter 3 studies the relationship between companies' foreign vulnerability and the choice of the exchange rate regime. In this chapter, I define companies' exchange rate exposure---the elasticity of companies' market value to changes in the real exchange rate---as a proxy for companies' external vulnerability and I analyze whether the number of companies with statistically significant exchange rate exposure varies according the exchange rate regime.; Chapter 4 examines whether changes in companies' exchange rate exposure in the transition from a fixed to a floating exchange rate regime can be associated to changes in corporate financial policies. The chapter analyzes the main determinants of companies' exchange rate exposure, focusing on the question whether foreign currency borrowing and hedging activities play a role in the determination of companies' exchange rate exposure.; Chapter 5 investigates the relationship between the choice of the exchange rate regime and companies' financial policies. It analyzes whether there is a relationship between the currency mismatches on companies' balance sheets and the exchange rate regime. Moreover, the chapter discriminates empirically the main cross-sectional determinants of companies' foreign borrowing and hedging activities. In this chapter, I also use a model built by Holmstrom and Tirole (1997) and developed by Martinez and Werner (2002) to test the implicit guarantees theory. More specifically, the chapter tests whether the fixed exchange rate regime biases corporate borrowing towards foreign currency denominated debt leading companies to disregard their exchange rate risk. In addition, the chapter also tests whether the floating exchange rate regime mitigates this problem by leading companies to take seriously their exchange rate risk.; Chapter 6 investigates the main cross-sectional determinants of companies' capital structure. Moreover, the chapter analyzes if macroeconomic policies like the choice of the exchange rate regime play a role on companies' choice between debt and equity.; Chapter 7 offers new evidence on the positive effect of international trade on productivity growth using industrial level data preceding and following Brazil's trade liberalization in 1988--1990.