Cash Sources and Financial Constraints: Evidence From Brazilian Listed Firms

Leonardo Chalhoub (), Guilherme Kirch () and Paulo Renato Soares Terra ()
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Leonardo Chalhoub: Universidade Federal do Rio Grande do Sul
Guilherme Kirch: Fundação Getúlio Vargas

Brazilian Review of Finance, 2015, vol. 13, issue 3, 470-503

Abstract: The Finance literature offers evidence that, in Brazil as in the U.S.A., publicly traded firms save more and more cash over the past decades. Using a panel data formed by accounting and market information from listed firms in BM&FBOVESPA from 1995 to 2013 and the model proposed by McLean (2011), estimated by the least squares method, this study aims to gather evidence on the sources of cash retained by companies in the Brazilian market. The results suggest that shares issuance, debt and operating cash flow have positive and significant correlation with the change in cash savings and that operating cash flow is the main source of cash for Brazilian firms. About the role of precautionary motives for the retention decision, evidence was found that in times of growth in these motives, the constrained group retains more from operating cash flow.

Keywords: Cash Policy; Cash Savings; Cash Sources; Panel Data; Least Squares. (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:brf:journl:v:13:y:2015:i:3:p:470-503

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