Resumo

Organizations determination of the volume of cash holdings is a complex and crucial issue in the financial context, as it involves analyzing the costs and benefits associated with excess liquidity. Decisions on cash retention policies often face dilemmas between maintaining high liquidity and maximizing profitability (Ye, 2018). Maintaining excess cash may not be economically, financially, or productively justified for the business. Corporate cash retention has attracted considerable interest in finance, especially with economic globalization and the impacts of international crises (Vo, 2017).

Studies focus on transactional and precautionary motives, but the speculative motive has been explored. Furthermore, the Brazilian context offers significant contributions, as most previous research on cash levels has focused on developed countries (Dutra et al., 2018). By identifying this gap, a question arises based on the reason for speculation through the peer effect. Does the peer effect affect the cash retention of Brazilian companies? The objective is to verify whether the proxy variable speculation influences the cash retention of Brazilian companies.

Excess cash as a reserve is not an exclusive characteristic of a given country. Research shows that publicly traded companies worldwide maintain a high level of liquidity, explained by the similarity between the factors determining cash reserves in developed and developing countries (Al-Najjar, 2013; Hall, Mateus & Mateus, 2014). As noted by Nunes and Kayo (2023), accumulating monetary reserves allows companies to be ready to act quickly and capture these opportunities, increasing their chances of obtaining significant returns.

For this research, we used the Ordinary Least Squares (OLS) method; the main characteristic is that the intercept and angular coefficients are determined by the sum of the squares of the residuals being as small as possible. In this way, the data is structured in a short panel (when the number of individuals is greater than the number of years) that is not balanced. As it is a static panel model, it was decided not to include the lagged cash balance variable (temporal stochastic effect) precisely to analyze the impact of the temporal stochastic independent variables.

Table 3 presents the regressions, where the coefficient on Spec is negative and statistically significant in the three regressions with coefficients of -0.471, -0.454, and -0.446. The results are contrary to H1; that is, the median CAPEX of peers being lower than the individual CAPEX of companies provides a negative Spec, which means that competing companies are investing less than the company. This value influences, via peer effects, companies' investment decisions and, therefore, reduces the level of liquidity (Riddick & Whited, 2009; Chen et al., 2019; Al-Hadi et al., 2020).

The results revealed a significant negative relationship between investment expectations and organizations' liquidity levels. This negative relationship can be attributed to increased investments, or the possibility of investing can lead companies to retain less cash. Furthermore, the results suggest that companies' cash retention is not a strategy to take advantage of investment opportunities since cash in financially restricted markets is considered a lower-cost financing than external capital. Thus, cash is prioritized for other liquidity situations or reasons.

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