PROFITABILITY OF BRAZILIAN LISTED CAPITAL COMPANIES: measurement alternatives and the influence of corporate governance

• DOI: 10.22533/at.ed.216382327049

• Palavras-chave: Profitability; Value; Corporate governance

• Keywords: Profitability; Value; Corporate governance

• Abstract:

  Introduction/Problematization: to analyze in what terms the various measures of profitability of companies: financial indicators, generation of value such as - EVA®, and value attributed by the market - market value, are related to each other. On the other hand, the globalization of capital markets has increased the pressure on companies to adopt and strengthen corporate governance practices. Would the adoption of governance practices also be an influencing factor in the creation of value for companies?

  Objective/proposal: to investigate the behavior of publicly traded Brazilian companies in relation to the different types of profitability calculation: economic return (RE), value addition (EVA®) and market value (MV), in the period from 2015 to 2019, as well as to identify if there was influence of corporate governance practices (GC) implemented by companies, in these results, in addition to a possible influence of the sector of activity.

  Methodological procedures: The study was carried out on a sample of 182 publicly traded Brazilian companies from 2015 to 2019. The EBIT and Net Income indexes were collected, as well as data for calculating the NOPAT and Cost of Debt indicators, in addition to market value. For corporate governance, B3's governance levels were used. Descriptive statistics used: Average, Standard deviation, Coefficient of variation, covariance and correlation; and the inferential, simple regression by the method of ordinary least squares.

  Main results: In the sample, the Coefficient of variation resulted around 5 times, high amplitude. The correlation was strongly positive between MV, LL and EBIT; the EVA® was strongly Negative. In the regression, MV was explained by EBIT with R² of 0.61 and LL of 0.23. The EVA was Negative with R² of 0.31. In the evolution of indicators over time, 51% of the sample generates RE and MV Positives. 20% generate only MV Positives and 15% generate RE, MV and EVA Positives. Differentiated level of GC is present in 70% of the sample; of these, 91% generate MV Positive, 71% generate RE Positive, and only 13% generate EVA® Positive.

  Conclusion: In the evolution of profitability, there was a predominance of MV, followed by RE. It is noteworthy that the EVA® obtained a negative correlation with RE and VM. In this way, the generation of value did not corroborate with the economic profit or how the market perceives the company. Observed that the MV has a strong relationship with RE. Companies with differentiated GC are also highlighted in the sample, especially in cases where MV resulted Positive. Results were achieved that partially corroborate with other studies cited in this study. The results and analyzes performed are limited to the sample, period and tools used.

  Work Contributions: It is possible to infer that the companies that presented Positive levels of RE were well evaluated by the market, as well as those that had a differentiated level of GC. This result goes against the common sense that the market is not concerned with the past results of companies, but only with their future return expectations. This effect was best observed in the consumer goods, cyclical consumption and public utility sectors. In relation to EVA®, a smaller number of companies present this Positive indicator, which is not a factor that proved to be relevant for market pricing.