Financial statement comparability and their
effects on corporate cash holdings of brazilian firms

Name: LAÍS FRANCA NARCISO

Publication date: 30/07/2019
Advisor:

Name	Role
DIANE ROSSI MAXIMIANO REINA	Advisor *

Examining board:

Name	Role
DIANE ROSSI MAXIMIANO REINA	Advisor *
PATRÍCIA MARIA BORTOLON	Internal Examiner *
TALLES VIANNA BRUGNI	External Examiner *

Summary: Financial statement’s users decision making usually involve a choice between
alternatives. Thus, information about an entity is more useful if it can be easily
compared with similar information reported by other entities or by the same entity
in other periods. Comparability is the qualitative characteristic that enables users
to identify and understand similarities and differences among items. Empirical
studies provided evidence that comparability can assist in reducing the
informational asymmetry and improve access to external financing. Since the
access to external financing is an important determinant of the corporate cash
holdings, the purpose of this study is to investigate the effects of financial
statement comparability on cash holdings of Brazilian listed firms during the
period from 2007 to 2017. Comparability was calculated using the De Franco,
Kothari and Verdi (2011) model, its relationship with the cash holdings was
analyzed using panel data regression. It was found a positive and significant
effect of the comparability on the corporate cash holdings, indicating that firms
with greater comparability maintain more cash. Then it was also analyzed the
interaction (multiplicative effect) of comparability with financial constraints and
with corporate governance on the corporate cash holdings. The evidence doesn’t
show significant effects of financial constraints nor its interaction with
comparability on corporate cash holdings. On the corporate governance model,
the interaction exhibits a positive and significant effect on cash holdings.
Indicating that on the firms with good governance, comparability has a positive
effect on the corporate cash holdings.

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