THE EFFECTS OF CAR WASH OPERATION ON THE BRAZILIAN CAPITAL MARKET: THE PETROBRAS CASE

ABSTRACT

Purpose:

The study aimed to identify the effects of the Car Wash Operation on the Brazilian capital market, focusing on the state-owned company Petróleo Brasileiro S.A. (Petrobras), including in the analysis other publicly traded companies that belong to the oil and gas sector.

Originality/value:

This research is relevant because it advances in discussing the influence of the Car Wash Operation on the stock price in the Brazilian context. This study contributes to revealing the use of the Google Trends tool to measure market attention and its effects.

Design/methodology/approach:

This is a quantitative research based on evidence of the volume of research in relation to the movement of the stock prices. The sample consisted of data from Petrobras and other companies belonging to the oil and gas sector in the period from January 2, 2013, to December 28, 2018. The most relevant dates were defined through the search volume index for the terms “Car Wash” and “corruption”, obtained from the Google Trends tool. The GARCH model (1,1) was adopted in the estimates.

Findings:

The results obtained from the dummies inserted to capture the abnormal returns showed a significant reaction in the behaviors of the assets. The flow of capital seems to have opted for assets of greater confidence than PETR3 and PETR4 in a few weeks of the Operation. This work showed that, in general, the outbreak of the Car Wash Operation influenced and brought some instability to other companies in the sector.

KEYWORDS:
Car Wash Operation; Corruption; Petrobras; Investor sentiment; Google Trends