Eduardo Kazuo Kayo

Capital structure and windows of opportunities: tests in the brazilian market

This study tests the market timing theory (EMTT) in the Brazilian Stock Market. The study is an adaptation from the Baker and Wurglers article (2002) that successfully tested the theory in the American Stock Market. The theory has not been proven in the Brazilian Market. The leverage decreases in the first year after the initial public offerings (IPO), but it grows once again without presenting the persistency required to corroborate the theory. No significant statistics were found between the market-to-book ratio and the leverage. The theory requires a negative correlation statistically robust for the market-to-book ratio to be confirmed.

Analysis of the dynamics of the adoption of technologies in the value chain

In this article, a mathematical model that allows the evaluation of the dynamics of the technological diffusion process will be derived, following specific premises. Based on real options concepts, an optimization model to identify the optimal time for the adoption of a technology will be developed, considering financial costs and benefits. Some interesting insights could be verified. For instance, when the interest rate is very high and overcomes the rate of evolution of the cost savings generated by the technology, there are incentives for a fast adoption of technologies. Conversely, situations in which the interest rate is very low can drive to a delay in the incorporation of new technologies. Considering other elements of the chain, the company can also obtain gains from the postponement of investments if their suppliers and customers adopt complementary technologies in advance. Therefore, there is a gain in productivity that can be appropriated by the company without indeed investing immediately in a given technology.

Capital Structure and Innovation Strategy: A Study in the Brazilian Context

The modern theory of the capital structure has been the subject of a great amount of studies, since the publication of the famous article by Modigliani and Miller (1958) where they defended that, under certain circumstances, the leverage (relationship between equity capital and third party capital) used by companies would not have impact on its value. Throughout time several theories had been developed to explain how companies define their level of indebtedness; one of them attempts to explain how specific aspects of each organization influence its capital structure. This paper, based on research prepared and published by Jonathan P. OBrien in the United States of America, evaluates for the Brazilian context the existence of empirical evidences of the occurrence of one of these particular aspects, innovation. The adoption of a competitive strategy based on innovation influences the financing structure of organizations. Innovative firms use, predominantly, equity capital and are forced to keep financial slack, since these firms are riskier. Of the three hypotheses proposed in this paper, two had not been corroborated by the statistical tests, while the other presented the results foreseen by the theory and compatible with other empirical studies on this subject.

Risk and Product Innovation: A Study of Brazilian Manufacturing Companies

The aim of the article is to study the relation between product innovation and its associated risk, particularly in the Brazilian manufacturing industry in the period of 1995-2005. A statistical model is developed based on the study realized by Bromiley (1991), seeking to identify whether factors such as performance of the firm, performance of the industry in which the firm operates, performance expectations and aspirations of the firm, besides its financial slack, are determinant factors of the risk taken hereby, specifically related to product innovation. In the study of data for Brazilian manufacturing firms, the estimated results do not support the model proposed.

The Asset-Attitude Approach for Competitive Advantage and Value-Added Models

In the spirit of discussion of theoretical alternatives, we present the Asset-Attitude Approach that aims to bring new concepts to the study of competitive advantage. Although assets, as related to resources and capabilities, do not represent a new concept, the AAA introduces the importance of the individuals behavior in the firm performance. In this sense, a possible investigation could be explored to build a bridge between strategy and finance, since behavioral finance is challenging paradigms of the modern theory of finance. Particularly, two innovations can be emphasized in the Asset-Attitude Approach: (i) the analysis of the origin of assets from the transformation of other, more elemental, assets, through a chemical analogy, in which new substances originate from transformations or reactions of other substances and (ii) the suggestion of existence of an equivalence relationship between assets and attitudes, similar to the existence of a conversion equation between mass and energy, as proposed in Physics. Although the approach raises more questions than answers, one important aspect is the discussion of the relevance of opportunity costs in a context of heterogeneous assets and attitudes. Since the opportunity costs serve as basis for economic rents in strategy and for abnormal returns in finance, the challenge of the relevance of this concept can have great impact in both theories.

The Major Accounting Adjustments to Calculate EVA. An Application to Brazilian Firms

The shareholder value creation is becoming an answer to the pressure of the investors and councils. Many approaches are available. Among them, the Economic Value Added (EVA), developed by Stern Stewart & Co. To correct the improprieties perceived in financial statements, some users of EVA adjust the income numbers based on the Generally Accepted Accounting Principles (GAAP), expecting that such adjustments may produce more trustworthy values and generate an environment favorable to a management behavior closer to the optimum. Besides that, this work investigates the correlation between the Brazilian Controllers understanding and the use of the company adopted accounting methods.