MARKET TIMING AND VALUE CREATION FOR SHAREHOLDERS FROM THE PERSPECTIVE OF CASH HOLDING

• Autor(a) principal: Januário, Alessandro Henrique de Araújo
• Data de Publicação: 2023
• Outros Autores: Tavares, Adilson de Lima
• Tipo de documento: Artigo
• Idioma: por
• Título da fonte: Revista Universo Contábil
• Texto Completo: https://ojsrevista.furb.br/ojs/index.php/universocontabil/article/view/10778
• topic: Market Timing; Cash Retention; Value Creation; Market Timing; Retención de Efectivo; Creación de Valor; Market Timing; Retenção de Caixa; Criação de Valor

This research investigates the relationship between cash retention and value creation for the shareholders of companies that use the IPO as an opportune moment for market timing behavior in the Brazilian stock market. The study sample consists of 102 non-financial companies listed on B3 that carried out an IPO between 2004 and 2017, segregated into two groups, market timers, and non-timers. In total, 202 IPOs took place during the period; cash behavior was also analyzed during the eight quarters following the IPOs, resulting in 816 observations. To achieve the objective, two econometric models are proposed, one for each formulated hypothesis, and the data analysis method used is dynamic panel regression with one-stage GMM-System estimators. The financial data necessary for calculating the variables that make up the econometric models were collected using the Refinitiv Eikon® database. The evidence from the Model I estimation confirms the first hypothesis: Market timers retain more cash than non-timers. In turn, the findings of the estimation of Model II are inconclusive, given that the explanatory variable is statistically insignificant, which is why it is not possible to determine the existence of a relationship between cash retention and shareholders' value creation. However, despite retaining, on average, more cash than non-timers, as evidenced by Model I, companies that use the IPO as an opportune moment for market timing behavior in the Brazilian stock market have lower value created for shareholders, as shown by Model II, given that the MVA of market timers grows by 247 million (R$) from one period to the other, while the average growth of non-timers is 534 million (R$) from one period to the next for the other, a difference of 287 million (R$). This result may derive from the high opportunity cost of idle cash since, as market timing is an opportunistic practice, managers generally do not have an immediate destination for the constituted resource.