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Corporate finance practice in Brazil: a survey

Author

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  • Cristiane Benetti

    (ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

Abstract

We report results of the Brazilian administration of the well-known Graham and Harvey (2001) survey. We rigorously translated and validated the questionnaire before administering it over the Internet. We delivered the questionnaire to 1,699 Brazilian private and public firms and received 160 responses for a return rate of 9.4%. We analyze the responses conditional on firm characteristics. The results of the financial policy survey in Brazil indicate that firms employ NPV and IRR as preferred investment techniques and the CAPM and its variations as the method for computing the cost of equity capital. They are also concerned with the cost of debt, transaction costs of market instruments, and they use internal funds as their main investment funding source. Also, conditional analysis indicates that large, listed, growth, and regulated firms behave significantly differently regarding financial decisions than their counterparts. Therefore, the most important takeaway from this study is that the institutional environment (i.e. markets, institutions, instruments, and the economy) is an important determinant of the practice of corporate finance.

Suggested Citation

  • Cristiane Benetti, 2015. "Corporate finance practice in Brazil: a survey," Post-Print hal-01507962, HAL.
    • Handle: RePEc:hal:journl:hal-01507962
    as

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