Impact of internationalization on the working capital requirement of Brazilian companies

Rosa, Arthur A. S.; Forti, Cristiano A. B.; Dias, Vitor F. M. B.

doi:10.1590/1678-6971/eRAMF220017.en

Arthur A. S. Rosa Correspondence concerning this article should be addressed to Arthur A. S. Rosa, Avenida João Naves de Ávila, 2121, Bloco 1F, Santa Mônica, Uberlândia, Minas Gerais, Brazil, ZIP Code 38400-902. Email: arthurasr@hotmail.com

Federal University of Uberlândia (Universidade Federal de Uberlândia – UFU), Uberlândia, MG, Brazil

https://orcid.org/0000-0003-4720-4791

Cristiano A. B. Forti

Federal University of Uberlândia (Universidade Federal de Uberlândia – UFU), Uberlândia, MG, Brazil

https://orcid.org/0000-0003-4678-7323

Vitor F. M. B. Dias

Federal University of Uberlândia (Universidade Federal de Uberlândia – UFU), Uberlândia, MG, Brazil

https://orcid.org/0000-0001-6084-5599

Correspondence concerning this article should be addressed to Arthur A. S. Rosa, Avenida João Naves de Ávila, 2121, Bloco 1F, Santa Mônica, Uberlândia, Minas Gerais, Brazil, ZIP Code 38400-902. Email: arthurasr@hotmail.com

Author notes

Arthur A. S. Rosa is now a Ph.D. student in Administration at the Postgraduate Program in Administration (PPGAdm/FAGEN) of Federal University of Uberlândia (UFU); Cristiano A. B. Forti is now a professor at the Faculty of Management and Business (FAGEN) of UFU; Vitor F. M. B. Dias is now a Ph.D. student in Administration at the PPGAdm/FAGEN of UFU.

Variable	Initials	Calculation	Expected signal	Authors
Dependent variable
Working capital requirement	WCR	[(Cash and cash equivalents + Inventories + Accounts receivable) - (Accounts payable + Other accounts payable)] / Total assets		Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Wasiuzzaman and Arumugam (2013)Wasiuzzaman, S., & Arumugam, V. C. (2013). Determinants of working capital investment: A study of Malaysian Public Listed firms. Australasian Accounting, Business and Finance Journal, 7(2), 63–83.
Variables of interest
Import	IMP	Foreign suppliers / Total suppliers	-	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Santos (2016)Santos, M. A. (2016). Internacionalização de empresas e o fechamento do capital: Um estudo sobre a deslistagem no mercado brasileiro. [Dissertação de mestrado não publicada]. Universidade Federal de Uberlândia.
Debt in foreign currency	DIVE	Short and long-term debt in foreign currency / Total liabilities	-	Saito and Hiramoto (2010)Saito, R., & Hiramoto, E. (2010). Foreign activity effects and capital structure: Brazilian evidence. Academia Revista Latinoamericana de Administración, (45), 59–75., Pereira (2013)Pereira, V. S. (2013). Ensaios sobre os efeitos da internacionalização na estrutura de capital e estrutura de propriedade de multinacionais latino-americanas. [Tese de doutorado não publicada]. Fundação Getulio Vargas., and Santos (2016)Santos, M. A. (2016). Internacionalização de empresas e o fechamento do capital: Um estudo sobre a deslistagem no mercado brasileiro. [Dissertação de mestrado não publicada]. Universidade Federal de Uberlândia.
American Depositary Receipt issuing firms	ADR	Dummy: 1 for firms that issue ADR	+	Souza et al. (2011)Souza, F. C. D., Murcia, F. D. R., & Marcon, R. (2011). Bonding hypothesis: Análise da relação entre disclosure, governança corporativa e internacionalização de companhias abertas no Brasil. Contabilidade, Gestão e Governança, 14(2), 62–81.
Crisis period	Crise	Dummy: 1 for crisis years	-	Baños-Caballero et al. (2010)Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2010). Working capital management in SMEs. Accounting & Finance, 50(3), 511–527. https://doi.org/10.1111/j.1467-629X.2009.00331.x https://doi.org/10.1111/j.1467-629X.2009... and Wasiuzzaman and Arumugam (2013)Wasiuzzaman, S., & Arumugam, V. C. (2013). Determinants of working capital investment: A study of Malaysian Public Listed firms. Australasian Accounting, Business and Finance Journal, 7(2), 63–83.
Control variables
Size	TAM	ln (Total assets)	-	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Moussa (2019)Moussa, A. A. (2019). Determinants of working capital behavior: Evidence from Egypt. International Journal of Managerial Finance, 15(1), 39–61. https://doi.org/10.1108/IJMF-09-2017-0219 https://doi.org/10.1108/IJMF-09-2017-021...
Leverage	ALAV	Gross debt / Total assets	-	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Palombini and Nakamura (2012)Palombini, N. V. N., & Nakamura, W. T. (2012). Key factors in working capital management in the Brazilian market. Revista de Administração de Empresas, 52(1), 55–69. https://doi.org/10.1590/S0034-75902012000100005 https://doi.org/10.1590/S0034-7590201200...
Tobin’s Q	QTB	(Gross debt + Equity) / Total assets	+	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Moussa (2019)Moussa, A. A. (2019). Determinants of working capital behavior: Evidence from Egypt. International Journal of Managerial Finance, 15(1), 39–61. https://doi.org/10.1108/IJMF-09-2017-0219 https://doi.org/10.1108/IJMF-09-2017-021...
Company age	IDC	ln (Age of the company)	-	Wasiuzzaman and Arumugam (2013)Wasiuzzaman, S., & Arumugam, V. C. (2013). Determinants of working capital investment: A study of Malaysian Public Listed firms. Australasian Accounting, Business and Finance Journal, 7(2), 63–83.
Operating cycle	COP	Economatica (days)	+	Azeem and Marsap (2015)Azeem, M. M., & Marsap, A. (2015). Determinant factors and working capital requirement. International Journal of Economics and Finance, 7(2), 280–292. https://doi.org/10.16930/2237-766220192842 https://doi.org/10.16930/2237-7662201928...
Growth	CRES	(Sales _{t -} Sales _t-1) / Sales _t-1	-	Azeem and Marsap (2015)Azeem, M. M., & Marsap, A. (2015). Determinant factors and working capital requirement. International Journal of Economics and Finance, 7(2), 280–292. https://doi.org/10.16930/2237-766220192842 https://doi.org/10.16930/2237-7662201928... and Moussa (2019)Moussa, A. A. (2019). Determinants of working capital behavior: Evidence from Egypt. International Journal of Managerial Finance, 15(1), 39–61. https://doi.org/10.1108/IJMF-09-2017-0219 https://doi.org/10.1108/IJMF-09-2017-021...
Return on assets	ROA	Net income / Total assets	+	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40. and Azeem and Marsap (2015)Azeem, M. M., & Marsap, A. (2015). Determinant factors and working capital requirement. International Journal of Economics and Finance, 7(2), 280–292. https://doi.org/10.16930/2237-766220192842 https://doi.org/10.16930/2237-7662201928...
Industrial sector	IND	Dummy: 1 for industry	+	Gill (2011)Gill, A. (2011). Factors that influence working capital requirements in Canada. Economics and Finance Review, 1(3), 30–40., Palombini and Nakamura (2012)Palombini, N. V. N., & Nakamura, W. T. (2012). Key factors in working capital management in the Brazilian market. Revista de Administração de Empresas, 52(1), 55–69. https://doi.org/10.1590/S0034-75902012000100005 https://doi.org/10.1590/S0034-7590201200... , and Moussa (2019)Moussa, A. A. (2019). Determinants of working capital behavior: Evidence from Egypt. International Journal of Managerial Finance, 15(1), 39–61. https://doi.org/10.1108/IJMF-09-2017-0219 https://doi.org/10.1108/IJMF-09-2017-021...
Commercial sector	COM	Dummy: 1 for commerce	+	Palombini e Nakamura (2012)Palombini, N. V. N., & Nakamura, W. T. (2012). Key factors in working capital management in the Brazilian market. Revista de Administração de Empresas, 52(1), 55–69. https://doi.org/10.1590/S0034-75902012000100005 https://doi.org/10.1590/S0034-7590201200...

Variable	Observations	Mean	Standard deviation	Minimum	Maximum
WCR	4,465	0.01	0.45	-1.43	10.01
IMP	3,277	0.04	0.09	0	0.36
DIVE	2,692	0.15	0.46	0	1.97
IDC	4,625	2.68	0.69	1.10	3.47
CRES	4,313	0.02	0.21	-0.41	0.51
COP	3,736	137.14	181.78	-5,871.06	620.45
TAM	4,478	13.78	2.60	6.96	17.37
ALAV	4,475	0.30	0.25	-0.00	0.85
QTB	4,475	0.57	0.52	-1.27	1.06
ROA	4,062	-0.03	0.2	-0.81	0.18
ADR	919	0.90	0.29	0	1
Crise	7,164	0.22	0.42	0	1
IND	7,164	0.26	0.44	0	1
COM	7,164	0.05	0.21	0	1

	WCR	IMP	DIVE	ADR	Crise	IDC	CRES	COP	TAM	ALAV	QTB	ROA	IND	COM
WCR	1
IMP	0.1474^* * significance at a 5% level.	1
DIVE	0.0857^* * significance at a 5% level.	0.2240^* * significance at a 5% level.	1
ADR	-0.0717^* * significance at a 5% level.	0.0949^* * significance at a 5% level.	0.1508^* * significance at a 5% level.	1
Crise	-0,025	-0,0004	0,0074	0,0386	1
IDC	-0.2002^* * significance at a 5% level.	0.0823^* * significance at a 5% level.	-0,0298	0.1822^* * significance at a 5% level.	0.0678^* * significance at a 5% level.	1
CRES	0.0534^* * significance at a 5% level.	0,0126	0.0591^* * significance at a 5% level.	-0.1182^* * significance at a 5% level.	-0.2024^* * significance at a 5% level.	-0.1532^* * significance at a 5% level.	1
COP	0.1479^* * significance at a 5% level.	0.0790^* * significance at a 5% level.	-0,0355	0,0613	-0,0263	0,0148	-0.0929^* * significance at a 5% level.	1
TAM	0.2078^* * significance at a 5% level.	0.0924^* * significance at a 5% level.	0.2747^* * significance at a 5% level.	0.2593^* * significance at a 5% level.	-0,0107	-0.1495^* * significance at a 5% level.	0.1248^* * significance at a 5% level.	-0,0223	1
ALAV	-0,1173	0,0067	0.1285^* * significance at a 5% level.	0,0658	0.0418^* * significance at a 5% level.	0,0121	0,0229	-0,1114	0.2606^* * significance at a 5% level.	1
QTB	0.7996^* * significance at a 5% level.	0.0579^* * significance at a 5% level.	0.0941^* * significance at a 5% level.	0,0039	-0,0085	-0.2121^* * significance at a 5% level.	0.0998^* * significance at a 5% level.	-0,0897	0.3651^* * significance at a 5% level.	0,0154	1
ROA	.3320^* * significance at a 5% level.	0,0347	0.0914^* * significance at a 5% level.	0,0594	-0.0546^* * significance at a 5% level.	-0.0406^* * significance at a 5% level.	0.1396^* * significance at a 5% level.	-0,0621	0.5541^* * significance at a 5% level.	0.0841^* * significance at a 5% level.	0.4982^* * significance at a 5% level.	1
IND	-0,015	0.4427^* * significance at a 5% level.	0.1204^* * significance at a 5% level.	0,0384	0.0000	0.3057^* * significance at a 5% level.	-0.0519^* * significance at a 5% level.	0.1231^* * significance at a 5% level.	0,0043	0,0171	-0.1062^* * significance at a 5% level.	0,027	1
COM	0,0284	-0.0694^* * significance at a 5% level.	-0,0164	-0.1617^* * significance at a 5% level.	0.0000	-0.0334^* * significance at a 5% level.	0,0268	-0,0098	0.0346^* * significance at a 5% level.	-0,0137	-0.0597^* * significance at a 5% level.	0,012	-0.1332^* * significance at a 5% level.	1

Model	1	2	3
Y	WCR	WCR	WCR
IMP	0.1840***
IMP	(7.54)
IMP x Crise	0.0914**
IMP x Crise	(2.56)
DIVE		0.0148***
DIVE		(3.15)
DIVE x Crise		0.0366***
DIVE x Crise		(5.04)
ADR			-0.0068
ADR			(-1.61)
ADR x Crise			-0.0166**
ADR x Crise			(-2.28)
Crise	-0.0132***	-0.0186***	-0.0044
Crise	(-2.99)	(-3.96)	(-1.08)
IDC	0.0049	0.0077**	-0.0004
IDC	(1.51)	(2.23)	(-0.14)
CRES	-0.0454***	0.0153	-0.0212***
CRES	(-5.04)	(1.53)	(-2.68)
COP	0.0000***	0.0006***	0.0001***
COP	(3.57)	(31.12)	(6.44)
TAM	-0.0187***	-0.0172***	-0.0106***
TAM	(-14.71)	(-11.89)	(-8.65)
ALAV	-0.0475***	-0.1589***	-0.0337**
ALAV	(-3.20)	(-9.98)	(-2.36)
QTB	0.7713***	0.6467***	0.7809***
QTB	(108.78)	(81.84)	(115.98)
ROA	0.1055***	-0.0673***	-0.0181
ROA	(6.06)	(-3.51)	(-1.12)
IND (dummy)	0.0412***	0.0271***	0.0773***
IND (dummy)	(8.36)	(6.04)	(22.78)
COM (dummy)	0.1096***	0.0936***	0.1177***
COM (dummy)	(16.84)	(12.34)	(21.14)
Constant	-0.1468***	-0.1349***	-0.2652***
Constant	(-7.74)	(-6.09)	(-15.18)
N	1,832	1,337	2,359
VIF	1.35	1.30	1.36
Woodridge	0.000	0.087	0.000
Wald	0.000	0.000	0.000
AR (1)	0.000	0.000	0.000
AR (2)	0.929	0.203	0.259
Sargan	0.339	0.415	0.378

W C R_{i t} = β_{0} + β_{1} (I M P_{i t}) + β_{2} (C r i s e_{t}) + β_{3} (I M P_{i t} \times C r i s e_{i t}) + β_{4} (A L A V_{i t}) + β_{5} ({QTB}_{i t}) + β_{6} (I D C_{i t}) + β_{7} (C O P_{i t}) + β_{8} (C R E S_{i t}) + β_{9} (R O A_{i t}) + β_{10} (C O M_{i}) + β_{11} (I N D_{i}) + ε_{i t}

W C R_{i t} = β_{0} + β_{1} (A D R_{i t}) + β_{2} (C r i s e_{t}) + β_{3} (A D R_{i t} \times C r i s e_{i t}) + β_{4} (A L A V_{i t}) + β_{5} ({QTB}_{i t}) + β_{6} (I D C_{i t}) + β_{7} (C O P_{i t}) + β_{8} (C R E S_{i t}) + β_{9} (R O A_{i t}) + β_{10} (C O M_{i}) + β_{11} (I N D_{i}) + ε_{i t}

W C R_{i t} = β_{0} + β_{1} (D I V E_{i t} + β_{2} (C r i s e_{t}) + β_{3} (D I V E_{i t} \times C r i s e_{i t}) + β_{4} (A L A V_{i t}) + β_{5} ({QTB}_{i t}) + β_{6} (I D C_{i t}) + β_{7} (C O P_{i t}) + β_{8} (C R E S_{i t}) + β_{9} (R O A_{i t}) + β_{10} (C O M_{i}) + β_{11} (I N D_{i}) + ε_{i t}

[1] Correspondence concerning this article should be addressed to Arthur A. S. Rosa, Avenida João Naves de Ávila, 2121, Bloco 1F, Santa Mônica, Uberlândia, Minas Gerais, Brazil, ZIP Code 38400-902. Email: arthurasr@hotmail.com

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