A Financial statement comparability and corporate cach holdings of brazilian firms
Abstract
The purpose of this study is to investigate the effects of financial statement comparability on cash holdings of Brazilian listed firms during the period from 2007 to 2017. Comparability was calculated using the De Franco, Kothari and Verdi (2011) model, its relationship with the cash holdings was analyzed using panel data regression. It was found a positive and significant effect of the comparability on the corporate cash holdings, indicating that firms with greater comparability maintain more cash. Then it was also analyzed the interaction (multiplicative effect) of comparability with financial constraints and with corporate governance on the corporate cash holdings. The evidence doesn’t show significant effects of financial constraints nor its interaction with comparability on corporate cash holdings. On the corporate governance model, the interaction exhibits a positive and significant effect on cash holdings. Indicating that on the firms with good governance, comparability has a positive effect on the corporate cash holdings. A possible explanation would be: since comparability can reduce the asymmetry, it will also reduce the probability that the company’s cash holdings be value at a discount, allowing for greater cash holding with less risk that the managers will use it for their own benefit.
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