Aquiles Elie Guimarães Kalatzis

Financial constraints and investment decisions: evidence from a highly unstable emerging economy

This study analyses the role of financial constraints on the investment decisions of 497 Brazilian firms. We use panel data, with firm-specific information for different years, allowing for the abandonment of the representative firm model. Information on capital intensity at the firm level is used to group firms. We estimate different models and the results suggest the presence of financial restrictions, especially for capital-intensive firms.

Multicollinearity and financial constraint in investment decisions: a Bayesian generalized ridge regression

This paper addresses the investment decisions considering the presence of financial constraints of 373 large Brazilian firms from 1997 to 2004, using panel data. A Bayesian econometric model was used considering ridge regression for multicollinearity problems among the variables in the model. Prior distributions are assumed for the parameters, classifying the model into random or fixed effects. We used a Bayesian approach to estimate the parameters, considering normal and Student t distributions for the error and assumed that the initial values for the lagged dependent variable are not fixed, but generated by a random process. The recursive predictive density criterion was used for model comparisons. Twenty models were tested and the results indicated that multicollinearity does influence the value of the estimated parameters. Controlling for capital intensity, financial constraints are found to be more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

Uma abordagem bayesiana para decisões de investimentos

This study analyses the investment decisions of 497 Brazilian firms in the period 1986-97. The role of financial constraints are considered both theoretically and empirically, through the use of Bayesian econometric models. We use longitudinal data, with firm-specific information for different years, allowing for the abandonment of the representative firm model. Information on capital intensity at the firm level allows for the separation of firms according to this variable, and makes it possible to consider information asymmetries. We estimate two different models, and the results suggest the presence of financial constraints, especially for capital-intensive firms.

The relationship between earnings quality and the probability of efficient investment decisions in Latin America

Increased conflicts of interest between managers and shareholders may result from information asymmetry. However, the literature has demonstrated that high-quality accounting information can reduce both the probability of information asymmetry and the problems created therein. In this context, few studies have analysed the impact of earnings quality on investment decisions, particularly in less-developed economies. Thus, this study aims to verify whether the earnings quality of Latin American companies affects the probability of efficient investment decisions, over-investments, and the probability of under-investment. For this purpose, a logit model was used, and data from the companies of seven Latin American countries were analysed. The results indicate that poor earnings quality reduces the probability of efficient investment decisions and increases the probability of under-investment. Thus, our primary conclusion is that there is evidence that high-quality accounting information influences the investment decisions of companies in Latin America.