The Effects of Financial Constraints on Cash Management: A Study with Private Firms of the Brazilian Sugarcane Industry

Aviner Augusto Silva Manoel; Marcelo Botelho da Costa Moraes; David Ferreira Lopes Santos; Marcos Fava Neves

doi:10.51341/1984-3925_2019v22n2a3

Authors

Aviner Augusto Silva Manoel Universidade de São Paulo http://orcid.org/0000-0002-2861-5686
Marcelo Botelho da Costa Moraes http://orcid.org/0000-0003-0761-0883
David Ferreira Lopes Santos http://orcid.org/0000-0003-3890-6417
Marcos Fava Neves http://orcid.org/0000-0002-5693-7543

DOI:

https://doi.org/10.51341/1984-3925_2019v22n2a3

Keywords:

Agribusiness, Financial crisis, Liquidity.

Abstract

Managing the cash holdings is one of the central activities of manager, because it is through cash that organizations balance their current and future resource needs, being this decision-making process challenging, especially in emerging markets and in private firms, where financial market constraints restrict the availability and flow of credit to economic activities. In this way, this study analyzes the effects of the financial constraints on cash management of the Brazilian Sugarcane Industry. Fixed-effects panel regression was used as research method, in which the financial statements of 48 private firms between 1998 and 2016 were analyzed. This article contributes to the literature by providing evidence on the effects of financial constraints on cash management in a context of scarcity of studies with private companies and in emerging markets. The results indicate that, on average, in financially constrained firms, a construct captured by size and age criteria, maintain higher percentages of their assets in cash than unconstrained firms. This result is statistically significant and consistent with precautionary motives, in which financially constrained firms manage their cash holdings in order to circumvent uncertainties in the macroeconomic environment.

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Author Biographies

Aviner Augusto Silva Manoel, Universidade de São Paulo

PhD Candidate in Controllership and Accounting at the School of Economics, Business Administration and Accounting in Ribeirão Preto (FEA-RP) - University of São Paulo (USP) – Av. dos Bandeirantes, 3900 - FEA-RP, ZIP 14040-905 - Ribeirão Preto, São Paulo, Brazil.

Marcelo Botelho da Costa Moraes

Professor of Financial Accounting at the Department of Accounting, School of Economics, Business Administration and Accounting in Ribeirão Preto (FEA-RP), University of São Paulo (USP) - Av. dos Bandeirantes, 3900 - FEA-RP, ZIP 14040-905 - Ribeirão Preto, São Paulo, Brazil.

David Ferreira Lopes Santos

Assistant Professor at the Department of Economy, Administration and Education, São Paulo State University (UNESP), School of Agricultural and Veterinarian Sciences, Jaboticabal. Rod. Prof. Paulo Donato Castellane, S/N, ZIP 14.884-900 Jaboticabal, São Paulo, Brazil.

Marcos Fava Neves

Professor at the Department of Business Administration, School of Economics, Business Administration and Accounting in Ribeirão Preto (FEA-RP), University of São Paulo (USP) - Av. dos Bandeirantes, 3900 - FEA-RP, ZIP 14040-905 - Ribeirão Preto, São Paulo, Brazil.

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