CONNECTIONS BETWEEN INVESTMENTS, FINANCING, AND DIVIDEND POLICY IN BRAZIL: CONTROLLING FOR ENDOGENEITIES
DOI:
https://doi.org/10.22561/cvr.v36i1.8634Keywords:
Investments, Financing, Dividends, Method of MomentsAbstract
The main business decisions involve the search for the best relationship between investments, financing, and dividends. Therefore, much is discussed about the importance of dividends in defining these policies. Although a common factor on how to estimate these relationships has not yet been reached, it is believed that they occur jointly, and thus, econometric techniques that consider possible endogeneities among the variables present in the models are needed. This study aimed to identify the interconnections between investment, financing, and dividend policy decisions of companies trading on the Brazilian market. Employing econometric techniques such as 2SLS, 3SLS, and GMM, the results pointed to a positive relationship between investments and dividends and confirmed the inverse relationship between leverage and dividends. Thus, the implicit hypothesis of this study was partially confirmed, showing the relationships among the variables, but it was not verified that they occur simultaneously.
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