Abstract

CANTON, Cristiane; MULLER, Mateus; DA SILVA, Tarcísio Pedro  and  DA ROCHA ARMADA, Manuel José. Financial Difficulty and Market Performance in Latin American Organizations. Rev.fac.cienc.econ. [online]. 2021, vol.29, n.1, pp.11-26.  Epub Mar 26, 2021. ISSN 0121-6805.  https://doi.org/10.18359/rfce.4450.

Financial difficulty is examined in various literature studies. However, its determining factors, such as the indicator, are further discussed without considering its impact on the market. The purpose of this work is to identify the impacts of financial difficulty on the market performance of listed Latin American companies, since it is an essential tool to determine the continuity of an organization. The efficient market and signaling hypothesis states that financial difficulty heralds a negative outlook for the market that impacts market performance. Thus, the analysis used data about companies listed on the Argentina, Brazil, Chile, Mexico, and Peru stock exchanges on a quarterly basis from 2013 to 2017. The results show that financial difficulty negatively impacts company market performance in the Brazilian, Chilean, and Mexican contexts. The study contributes to the literature with the use of financial difficulty in addition to a predictive indicator, as it shows information that can be used by stakeholders at the time of negotiation or maintenance of their stock portfolio.

Keywords : crisis; finance; financial difficulty; Latin America; market performance.

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