The influence of the financial slack on the economical performance of Brazilian and Chilean companies

Authors

  • Jaime Dagostim Picolo Universidade Regional de Blumenau --- FURB, Rua Arthur Eugênio da Silveira, n. 280, Pinheirinho, CEP - 88804-655, Criciúma, SC, Brazil
  • Cristian Baú Dal Magro Universidade Regional de Blumenau --- FURB, Rua São Paulo, n. 3250 - Itoupava Seca, CEP 89.030-080, Blumenau, SC, Brazil
  • Tarcísio Pedro da Silva Universidade Regional de Blumenau --- FURB, Rua São Paulo, n. 3250 - Itoupava Seca, CEP 89.030-080, Blumenau, SC, Brazil
  • Luciano Bernardo Universidade Regional de Blumenau --- FURB, Rua Dr. Antônio Haffner, n. 455 - Água Verde, CEP 89.036-640, Blumenau, SC, Brazil

Keywords:

Financial slack, Transitory slack, Discretionary slack, Economic performance

Abstract

Although financial slack is a resource used to generate opportunities, a high level of this may lead to a more relaxed or complacent management. Taking into account this divergence, the present study examines the influence of financial slack on economic performance. The study involved 190 companies in Brazil and 104 in Chile. The results indicate that in Brazil and Chile, the gross profit showed better explanatory power to the financial slack resources. However, the high discretionary financial slack showed negative magnitude and a positive link with the financial resources demand, suggesting that companies become proactive in new investments and in strategic choices when there is a demand for financial resources.

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Published

2018-01-01

Issue

Vol. 41 No. 115 (2018): Pages 1-150 (January-April 2018)

Section

Articles

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