The analysis of the gathered data and their relationships enables it to be evaluated whether there are incentives for the CFO to be affected through the choice of classification of interest and dividends.
The values of total assets, CFO, return on assets, and indebtedness, as well as the Corporate Taxpayers’ Registration (Cadastro Nacional da Pessoa Juridica – CNPJ) of the companies chosen, were obtained from the Economatica ® database. These financial and accounting data considered consolidated values from the 12-month period ending on December 31 st . The CFSs were extracted from the Full Annual Financial Statements (annual FSs), held on the website of the CVM (the regulatory body for the Brazilian capital market), after searching by CNPJ.
This difference is the result of annual FSs that were not disclosed, due to the company only having disclosed financial statements in some of the years
Only cases with an explicit indication in the CFS of interest and dividends, whether paid or received, were included in the database, independently of the motive for not presenting this information, whether it was not applicable or because it did not feature. Another criterion adopted concerns the cases in which in the financial year there were no values for the items under analysis, but there was CFS information because there was an amount from the previous comparative period, so the classification of the financial year in question was tabulated and indicated with a 0 value.
The list of companies for analysis of the respective data was taken from the Economatica ® database. The filters of Brazil as the host country, company with an active status, and the most traded stock were used in order to avoid repetition of companies. The industry segments filter was also used and the companies classified as “Finance and Insurance” and “Funds” were excluded from the database, since financial institutions do not form part of the scope of the research. Therefore, 352 companies were initially selected.
Next, the annual FSs from 2008 to 2014 of these companies were obtained. Companies with an accounting year ending in other periods that were not December 31 st were excluded, given that the financial and accounting data collected were from this base date.
Data with inconsistencies (e.g. positive interest paid, negative dividends received, etc.) were also excluded from the sample, as well as cases in which the CFS was not presented, was not legible (low quality of scanned copy), or missing some part (second page of the CFS). Appendix A details the periods and companies with such occurrences.
Table 2 presents the reconciliation of the difference between the predicted quantity of annual FSs that would be analyzed, if the 352 companies chosen had disclosure in all the financial years, and the final quantity actually used in the research.
Via the analysis of the CFSs featuring in the 2,290 annual FSs, the data were collected relating to the companies’ interest and dividends cash flows
Table 3 provides a summary of the quantity of data gathered through that analysis, considering that each annual FS may have from zero to four collected data items, www.paydayloanstennessee.com/cities/gainesboro/ depending on the items (interest paid, interest received, dividends paid, and dividends received) that feature in the respective CFS.
The data indicated in Table 3 were used to direct the research hypotheses. The exception occurs for the data indicated on the first line of that table, since of the total of 1,145 data items regarding interest paid, four were excluded from the database to run the regression that has interest paid as the dependent variable (model B), resulting in 1,141 used data items. The excluded data refer to the company Dommo Empreendimentos Imobiliarios S.A., whose profitability and debt indices distort the descriptive analyses as they are too high. In 2011, for example, this company had a net loss of R$ 6,043,, total assets of R$ 61,, and total liabilities of R$ 9,048,, resulting in profitability and debt indices of 4,168% and 6,240%, respectively, when the mean for the period was from 4% to 61% (excluding that company). Except for the exclusion of the data from that company, no other treatment was needed for outliers.