Resumo

Little attention was paid to the value attributed by the shareholders to a marginal increase in cash level (FAULKENDER, 2006). Agency theory predicts that an excess cash held by the company may not be beneficial to the shareholder, since the manager may use the excess cash for empire building (JENSEN, 1986), thus, R$ 1 marginal cash may not represent an increase of R$ 1 in the market value of the company because of such problems.

The Brazilian environment becomes important and relevant to this research agenda because it is an emerging country with high interest rates, which lowers the costs of maintaining highers level of cash. Regarding external financing access, Brazil ranks low in the Credit/GDP ratio according to World Bank, and have an equity financing market in development. About corporate governance, Brazilian companies are known for the high shareholder concentration and low governance. Especially, Brazilian companies are more prone to the second type of agency problem.

Therefore, the objective of this paper is to investigate the marginal value of the cash allocated by the investor to the companies listed in BM&FBOVESPA, from 2000 to 2016.

To investigate the value attributed by shareholders to a marginal cash increase, a Faulkender & Wang (2006) cash holdings model was used estimated. The data used in the study were collected from Comdinheiro. It comprises all the companies that traded their stocks on the stock exchange in the period from 2000 to 2016, excluding the companies classified in Financial industry and Public Utility. In addition, we excluded companies that exhibited negative equity at some point in the sample, as well as those that presented possible errors, such as: negative total assets.

Our main empirical results are the following. First, for the representative firm, Brazilian shareholders attribute a value of R$ 1.06 to the marginal cash inflow, additionally, there is no evidence that the investor evaluates marginal cash differently due to firm’s financial restriction. Second, the hypothesis that the cash value is decreasing in the the cash level has also not been confirmed, a sign that, in the absence of dividend taxation, the shareholder does not attribute a different amount due to the probability of being distributed.

This article contributes with the current literature by showing that the investor does not value differently higher or smaller amounts of cash due the absnce of taxation on dividends in Brazil.