Access to finance, working capital management and company value: evidences from Brazilian companies listed on BM&FBOVESPA

Abstract

In this research, we have analyzed the impact of financial leverage on the relationship between working capital and company value and how financial constraints on access to financing affect this relationship. In addition, we have analyzed the relationship between working capital and company value. Using a sample of Brazilian public companies listed on BM&FBOVESPA from 1995 through 2009, we found evidence for the following conclusions: an extra Real (R$) of investiment in working capital is significantly less worth, on average, than an exra Real (R$) of investiment cash; and, on average, increasing the level of working capital at the beginning of a fiscal year reduces company value.