Guilherme Kirch and Paulo Renato Terra
This paper aims to examine the interdependence of financial decisions (investment, financing, dividends and cash-holding) under financial constraints.
Abstract
Purpose
This paper aims to examine the interdependence of financial decisions (investment, financing, dividends and cash-holding) under financial constraints.
Design/methodology/approach
The authors specify and estimate a system of simultaneous equations with panel data and firm fixed effects by three-stage least squares in a sample of firms from 62 countries from 1996 to 2010.
Findings
The main findings largely corroborate previous studies regarding the interdependence of financial decisions. The authors also find evidence suggesting that financial constraints have a major impact on firms’ financial decisions. The results also suggest that financial constraints manifest themselves in virtually all firms, indicating that such constraints are a matter of degree and not of kind.
Research limitations/implications
Implications regarding the impact of cash flows on investment and cash-holding decisions are only partially confirmed.
Practical implications
The results are consistent with the hypothesis that financial constraints distort the financial policies of firms. For the purpose of formulating policies that reduce these distortions, the authors emphasize the role of the availability of internal funds and the recoverable fraction of assets in easing financial constraints, thus allowing for greater investment on the part of firms.
Social implications
The results suggest that regulators should promote policies that reduce the dependence of corporate investment on internally generated cash flows.
Originality/value
Unlike previous studies, the authors account for the direct impact endogenous variables could have on each other. In addition, they explore the impact of each country’s particular legal environment on the pledgeability of assets at the company level.
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Timóteo Zagonel, Paulo Renato Soares Terra and Diogo Favero Pasuch
This study aims to analyze the influence of taxes and corporate governance on the dividend policy of Brazilian companies.
Abstract
Purpose
This study aims to analyze the influence of taxes and corporate governance on the dividend policy of Brazilian companies.
Design/methodology/approach
The authors identify the changes of the tax legislation in Brazil in the period 1986-2011 and check their effect on corporate dividend policies for preferred and common shares. The authors use panel data Probit and Tobit estimation to verify the probability of companies to pay dividends under different tax regimes. The final sample comprises 672 companies, 1,159 traded stocks and 30,134 observations
Findings
The authors’ results suggest that changes in the tax legislation have a significant influence on dividend payments. Also, firms do not follow target payout ratios, but dividends are moderately dependent on past payments. Dividend payouts are affected by stock voting rights, privatization and dividend deductibility. Changes in regulation that reduce the agency problems among shareholders affect positively payout ratios.
Practical implications
For managers, maximizing shareholders’ value requires taking into account the consequences of the taxation when designing financial policies for the firm. For investors, stock portfolio selection should take into account payout behavior and how changes in dividend taxation affect stocks’ value. For policymakers, the effects of changes in the tax code on corporate behavior are of utmost importance to stimulate private investment and economic growth.
Originality/value
There are several tax law changes in Brazil within the period analyzed, creating a good opportunity to study the effect of taxation on dividend policy and its dynamics over time.
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André Filipe Zago de Azevedo and Paulo Renato Soares Terra
This paper sets out to argue that, due to a stable set of economic policies over the past decade, today Brazil is much more resilient to international financial crises than in the…
Abstract
Purpose
This paper sets out to argue that, due to a stable set of economic policies over the past decade, today Brazil is much more resilient to international financial crises than in the 1990s.
Design/methodology/approach
The paper presents preliminary macroeconomic data in a country case study.
Findings
The paper concludes that the initial impact of the current international financial crisis on Brazil has been much less severe than similar crisis episodes in the past.
Research limitations/implications
Given that the crisis is still unfolding, the paper presents only preliminary data regarding its impact on emerging markets.
Practical implications
The paper suggests that emerging markets should adopt flexible exchange rate regimes and stable macroeconomic policies as a means to reduce their exposure to international shocks.
Originality/value
The paper makes an initial diagnosis regarding the impact of the international financial crisis on emerging markets that have adopted sensible economic policies, and is of interest to scholars, business people, and policymakers in developed and emerging countries.
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Marcos Alencar Abaide Balbinotti, Cristiane Benetti and Paulo Renato Soares Terra
The purpose of this paper is to report on the systematic translation and content validation method used to produce the Brazilian Portuguese version of the Duke Special Survey on…
Abstract
Purpose
The purpose of this paper is to report on the systematic translation and content validation method used to produce the Brazilian Portuguese version of the Duke Special Survey on Corporate Policy by Graham and Harvey.
Design/methodology/approach
In accordance with the requirements for cross‐cultural application of surveys, the paper accounts for obvious differences in language, culture, and the institutional setting and employ well‐known techniques from the field of psychology, such as the use of backtranslation, to ensure faithfulness to the original survey. A panel of experts served as judges in evaluating the clarity of language and the practical pertinence and theoretical dimensions of the questionnaire. Coefficients of content validity for each item and for the instrument as a whole are reported.
Findings
The results illustrate how a questionnaire designed for one country should be rigorously translated and validated prior to use in another country.
Research limitations/implications
Although the content validity of the translated version of the Duke Special Survey on Corporate Policy for use in Brazil is generally satisfactory, a few items may prove to be a challenge for the Brazilian CFO to answer, particularly those questions concerning features that are uncommon in the Brazilian financial market.
Originality/value
This paper explores the field study method in finance by borrowing from the vast experience of psychology research in the rigorous translation and validation of survey instruments. This study also highlights the similarities and differences in the interpretation of questions between emerging and developed markets.
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The purpose of this paper is to test the main theories of corporate debt maturity in a multi‐country framework, in an attempt to understand country‐specific constraints.
Abstract
Purpose
The purpose of this paper is to test the main theories of corporate debt maturity in a multi‐country framework, in an attempt to understand country‐specific constraints.
Design/methodology/approach
Dynamic panel data analysis estimated by the generalized method of moments, techniques that account properly for cross‐section and time series variation allowing for dynamic effects.
Findings
There is a substantial dynamic component in the determination of a firm's maturity structure; firms face moderate adjustment costs towards its optimal maturity, and the determinants of maturity structure and their effects are similar between Latin American countries and the USA; and there is a partial empirical support for each of the theoretical hypotheses tested.
Research limitations/implications
Firm ownership, accounting standards, financial market depth, and the degree of supervision on financial reporting may vary across countries, which may affect the quality and consistency of some variables.
Practical implications
Firms face costs in adjusting the maturity of their debt, which gives such decision a long‐term character, and the determinants of debt maturity do not seem very sensitive to a country's business and financial environment.
Originality/value
The paper focuses on a sample of developing countries that have so far been ignored in empirical studies, employs empirical techniques that account properly for cross‐section and time series variation, and the model allows for dynamic effects that have seldom been considered in previous research.
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Abdelaziz Chazi, Paulo Renato Soares Terra and Fernando Caputo Zanella
The purpose of this paper is to survey financial managers in the Arab Gulf region about a broad set of financial decisions and contrast their answers with both prescriptions of…
Abstract
Purpose
The purpose of this paper is to survey financial managers in the Arab Gulf region about a broad set of financial decisions and contrast their answers with both prescriptions of financial theory and practices of their North American and European peers.
Design/methodology/approach
The paper uses Graham and Harvey's questionnaire on the cost of capital, capital budgeting and capital structure that is also employed by Brounen et al. in Europe, containing two additional questions on corporate governance. Moreover, the survey included an additional question about Islamic financial instruments.
Findings
Despite each firm's unique characteristics and institutions, chief financial officers (CFOs) in the Middle East are acting in a manner similar to their North American and European counterparts.
Originality/value
All CFOs surveyed are located in countries that abide by a combination of Islamic, civil (French, Romano‐Germanic), and common (Anglo‐Saxon) laws. To the best of the authors' knowledge, this is the first time that a nearly identical corporate finance survey has been simultaneously administered in North America, Europe and the Arab Gulf region.
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Abstract
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This chapter examines books written by foreign authors which were published in Brazil and censored by the military regime between 1964 and 1985. The study focuses on non-fiction…
Abstract
This chapter examines books written by foreign authors which were published in Brazil and censored by the military regime between 1964 and 1985. The study focuses on non-fiction books, using official period documentation, with the goal of conducting an extensive survey of these works as well as examining the reasons why they were censored by the regime. The results of the research lead us to a greater understanding of the reasoning of censorship from within the State and to a greater understanding of the Brazilian military dictatorship as a whole.