Wesley Mendes-Da-Silva

Credit Card Risk Behavior on College Campuses: Evidence from Brazil

College students frequently show they have little skill when it comes to using a credit card in a responsible manner. This article deals with this issue in an emerging market and in a pioneering manner. University students (n=769) in Sao Paulo, Brazil’s main financial center, replied to a questionnaire about their credit card use habits. Using Logit models, associations were discovered between personal characteristics and credit card use habits that involve financially risky behavior. The main results were: (a) a larger number of credit cards increases the probability of risky behavior; (b) students who alleged they knew what interest rates the card administrators were charging were less inclined to engage in risky behavior. The results are of interest to the financial industry, to university managers and to policy makers. This article points to the advisability, indeed necessity, of providing students with information about the use of financial products (notably credit cards) bearing in mind the high interest rates which their users are charged. The findings regarding student behavior in the use of credit cards in emerging economies are both significant and relevant. Furthermore, financial literature, while recognizing the importance of the topic, has not significantly examined the phenomenon in emerging economies.

The Voluntary Disclosure of Financial Information on the Internet and the Firm Value Effect in Companies across Latin America

Society has been imposing standards of ethical behavior on the corporations, above all as regards the degree of transparency of information about their activities being made available to the public. At the same time the world has gone through changes because of the Information Age. The old paradigms of communication have been definitely broken, bringing about changes in the day-to-day of the corporations. Thus the companies are increasing the use of the Internet as a means of investor relations. By that they present a greater degree of corporate transparency to the market, which may maximize value for the shareholders. Studies have evaluated that the practice of Corporate Governance adopted by Latin American companies is still in the beginning (La Porta et al. 2000 and Gibson, 2002). Also the scientific production about that theme is still very discreet in Latin America. Thus being, the objective of this article is to verify the existence of association between the disclosure of financial information using the Web (INFO) by Latin American companies and the firm value as measured by the Tobins Q Ratio (Q). The study consists of a cross-section based on data from a group of 150 companies selected randomly and stratified considering the environment of the Stock Exchanges in Argentina, Brazil and Mexico in 2002. Multivariate analysis has made evident the existence of significant association between the firm value and the voluntary Disclosure of Financial Information. The results have also revealed that this association could vary according to the Industry sector (SECT) of the company or also its size (SIZE). It has also been observed that it is irrelevant the country (COUNT) in which the company operates to the association between the voluntary disclosure of financial information on its web page and the firm value.

Disclosure via website corporativo: um exame de informações financeiras e de governança no mercado brasileiro

Este artigo objetiva analisar a relacao entre a disseminacao voluntaria de informacoes relevantes nos websites de empresas abertas com suas caracteristicas, tendo como amostra 282 empresas nao financeiras listadas na Bovespa. Com base na relevância de informacoes corporativas (financeira e de governanca) avaliadas pelos intermediarios de informacoes, que embasaram a constituicao de indices ponderados de disclosure, os resultados sugerem que ha maior disclosure: i) quanto maior a firma e quanto maior o retorno das acoes da empresa; ii) em empresas de governanca corporativa diferenciada; iii) em categorias de informacoes corporativas mais requeridas pelas agencias de rating e pelas corretoras; iv) em empresas mais endividadas.

Development of a financial literacy model for university students

Purpose - – The purpose of this paper is to build and compare models that assess university students’ financial literacy. Financial literacy, understood as the mastery of a set of knowledge, attitudes and behaviors, has assumed a fundamental role in allowing and enabling people to make responsible decisions as they strive to attain financial wellbeing. To this end, models that integrate financial knowledge, behavior and attitude are integrated. The models are subsequently estimated, and many comparative tests are performed. Design/methodology/approach - – The study investigated a random sample of 534 university students attending public and private universities in southern Brazil. The choice of scale was based on consideration of the best adjustment for the Brazilian context, appropriate translation and content validation. For an analysis of the collected data, structural equation modeling was employed using two strategies. Findings - – The findings indicate that, in the model estimation stage, the scales for behavior and attitude have been reduced. Among all of the models estimated, the best adjusted model indicates that financial knowledge and financial attitude have positive impacts on financial behavior. Research limitations/implications - – The results are not generalizable to the wider population; to enable such generalization, different profiles should be researched using a larger sample. In practical terms, the financial behavior of Brazilian university students expresses the ability to establish long-term aims and saving aimed at future acquisitions and unexpected spending. This behavior is directly influenced by basic and advanced questions of financial knowledge and also by the importance attributed to attitude by establishing aims, control of spending and financial reserves. Originality/value - – This paper describes a pioneer study with respect to modeling financial literacy in Brazil. This topic can be improved as the need for rigorous evaluation of financial literacy grows at the same speed as the creation of more complex financial products.

Punidos por baixo desempenho: impactos da governança corporativa sobre o turnover de executivos no Brasil

Uma crescente parcela das pesquisas realizadas em Estrategia e em Financas tem dedicado atencao ao estudo da governanca corporativa, destacando suas implicacoes para o desempenho global das empresas. Uma das formas de avaliar as estruturas e praticas de governanca corporativa e verificar a sensibilidade do turnover de executivos ao desempenho da firma, objetivo desta pesquisa. A analise e conduzida tomando como referencia um conjunto de 176 empresas industriais listadas na Bovespa entre 1997 e 2001. Os principais resultados obtidos foram tres: (a) a composicao do conselho de administracao nao mostrou-se significativa para o nivel de turnover; (b) a rentabilidade da empresa esteve correlacionada de forma significativa e negativa com o turnover, indicando que as empresas que atingiram melhores niveis de retorno sobre seus ativos, bem como aquelas que obtiveram maiores valores para a rentabilidade sobre o patrimonio liquido, em media, substituiram menores parcelas de sua diretoria executiva; (c) entre as variaveis estudadas, a mais importante para determinacao do turnover e o tamanho da firma.

Análise empírica do senso de controle: buscando entender o excesso de confiança

In the emerging field of behavioral finance, where details of human behavior concerning financial decision making are broached, implications of cognitive psychology and sociology are considered. In this way, scientific production, still small but making steady headway, of this thematic in the national scope has essentially laid more focus on the consequences of the cognitive biases of agents, which can reduce the validity of judgments which have been made. Some of the cognitive biases considered in literature, such as overconfidence and procrastination, are influenced by the sense of control that each person possesses. In this way, this article aims to verify associations between age and sense of control, analyzing the mediating effect of other personal characteristics on this association. The study stems from data collected during the first trimester of 2006, from 421 people living in Brazil. The main results suggest a significant quadratic association, like an inverted U curve, between age and sense of control, with this relationship being influenced by the level of education and the perceived general health conditions of each individual. It would seem, therefore, that the evolution of peoples sense of control during their lifetimes is influenced by their education and global health.

Effects of Friendship in Transactions in an Emerging Market: Empirical Evidence from Brazil

In the emerging field of behavioral finance, including human behavior aspects and implications of cognitive phsychology and anthropology in decisions are considered. The formulated hypotheses were tested by way of 400 questionairres answered by students enrolled in MBA programs. The principal results reached suggest that individuals involved in transactions among friends or among strangers assume different behaviors, friends agree about the price attributed to an asset, while strangers show the propensity to bargain.

STOCK EXCHANGE LISTING INDUCES SOPHISTICATION OF CAPITAL BUDGETING

This article compares capital budgeting techniques employed in listed and unlisted companies in Brazil. We surveyed the Chief Financial Officers (CFOs) of 398 listed companies and 300 large unlisted companies, and based on 91 respondents, the results suggest that the CFOs of listed companies tend to use less simplistic methods more often, for example: NPV and CAPM, and that CFOs of unlisted companies are less likely to estimate the cost of equity, despite being large companies. These findings indicate that stock exchange listing may require greater sophistication of the capital budgeting process.This article compares capital budgeting techniques employed in listed and unlisted companies in Brazil. We surveyed the Chief Financial Officers (CFOs) of 398 listed companies and 300 large unlisted companies, and based on 91 respondents, the results suggest that the CFOs of listed companies tend to use less simplistic methods more often, for example: NPV and CAPM, and that CFOs of unlisted companies are less likely to estimate the cost of equity, despite being large companies. These findings indicate that stock exchange listing may require greater sophistication of the capital budgeting process.

The Influence of E-disclosure on the Ex-Ante Cost of Capital of Listed Companies in Brazil

The aim of this article is to show the existence of a relationship between voluntary disclosure via corporate websites and the ex-ante cost of capital of companies listed on the BM&FBovespa. Ordinary least-squares regression equations produced the following results: (a) on average, the companies listed on the New Market showed a lower cost of capital (≈3.3 percentage points lower); (b) on average, the companies deemed to be the most aggressive showed a higher cost of capital (≈3 percentage points higher than the conservative companies); and (c) the metrics of corporate website disclosure did not appear to be related to cost of capital. JEL Classification: E32, E44, G31, G32

Small worlds and board interlocking in Brazil: a longitudinal study of corporate networks, 1997-2007

Social Network Analysis (SNA) is an emerging research field in finance, above all in Brazil. This work is pioneering in that it is supported by reference to different areas of knowledge: social network analysis and corporate governance, for dealing with a similarly emerging topic in finance; interlocking boards, the purpose being to check the validity of the small-world model in the Brazilian capital market, and the existence of associations between the positioning of the firm in the network of corporate relationships and its worth. To do so official data relating to more than 400 companies listed in Brazil between 1997 and 2007 were used. The main results obtained suggest that the configuration of the networks of relationships between board members and companies reflects the small-world model. Furthermore, there seems to be a significant relationship between the firm’s centrality and its worth, described according to an “inverted U” curve, which suggests the existence of optimum values of social prominence in the corporate network.