Adding value, profitability and indebtedness: an approach to companies listed on the B3 stock exchange in the pandemic period

Abstract

The objective of this work was to analyze the degree of explanation of the size factor, the economic value added and the profitability as a function of equity on the level of indebtedness of the main companies listed on the Brazilian Stock Exchange. The discussion of the health crisis caused by Covid-19 is incorporated as a determining factor, as well as the theoretical discussion that the stock market indicator can be an important estimator of the behavior of the economy. The methodology used was a dynamic panel based on the methodology developed by Arellano and Bond in 1991, justified by the nature of the data. The results support the hypotheses launched in the study, where the variation in value addition has a positive impact on indebtedness for the pandemic period, and increases in profitability reduce companies' financial risk exposure. The effects of each of the variables are notable according to the analyzed interval, that is, in the pre- and pandemic period. The main contribution of this article is to provide a broad and rigorous empirical approach in order to assess the impact of the studied variables. In addition, this study considers companies with greater volume and liquidity serving as a proxy for the sectors of the Brazilian economy.