The role of total value added to be distributed to reduce the negative effects of the pandemic on the share price

Abstract

This research analyzes the relationship between the total value added to be distributed and the share price in the before, during, and post-pandemic periods. The data were collected on the Securities and Exchange Commission (CVM) website and Refinitiv Eikon®, resulting in 1,910 observations of Brazilian companies from 2010 to 2022 from all sectors, except Government Activity (due to lack of data). The data were treated using descriptive statistics and the Generalized Least Squares (GLS) regression model. The results revealed that i) the disclosure of the TVAD is relevant to explain the share price; ii) there is a negative relationship between the pandemic period and the share price; and iii) the interaction between the TVAD and the pandemic has a positive relationship with the share price. The results contribute to investors, suggesting that the Value Added Statement (VAS) information can increase the share price in periods of more significant uncertainty. With managers, it shows that the generation of more wealth can increase the price of shares, which can help them obtain better returns since part of the remuneration is usually linked to the performance of the shares. With Brazilian regulators, the results may indicate that the mandatory disclosure of VAS during the pandemic is relevant to assisting shareholders in decision-making. The gap explored in this research is the lack of analysis of the relationship between TVAD and the pandemic. The study's relevance is to highlight to the shareholders what information from the VAS contributes to an increase in the share price in periods of greater instability. Therefore, the impact of the study is that users can use the VAS information for share pricing, especially in periods of greater economic instability.