Impact of internationalization on the working capital requirement of Brazilian companies

Abstract

Purpose: This study aims to analyze the effects of crisis periods on the relationship between internationalization and the working capital requirement (WCR), from 2010 to 2018, using publicly-traded Brazilian firms as a sample. Originality/value: This paper contributes to the literature by addressing a topic that is still little explored regarding the relationship between WCR and internationalization, as well as analyzing the influence of the economic crisis on this relationship, using, for that, three internationalization proxies for the robustness of the results. Design/methodology/approach: To achieve this goal, a regression by the generalized method of moments (GMM) with panel data was used. For this, three databases were used for data collection: Economatica, Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM), and J. P. Morgan. Findings: More internationalized Brazilian firms tend to have a higher WCR and use stock as a way to protect themselves against possible unforeseen events arising from import processes. In addition, internationalization is shown as a way for firms to maintain their level of activity during national crisis periods.