Covid-19 and its impacts on financing and investment policies

Abstract Purpose: To analyze how the Covid-19 has impacted the financing, capital structure, and investment policies of Brazilian companies from a behavioral finance perspective. Originality/value: The study focused on the behavioral finance literature, Prospect Theory, Big Five Theory, and Pecking Order Theory, in order to substantiate and explain the consequences of the emotions implicit in corporate decisions and their impacts on organizations during the Covid-19 crisis. Design/methodology/approach: A questionnaire was used, containing 26 questions spread over three sections: 1. investment, financing, and capital structure decisions made in the first half of 2020; 2. personality dimensions of the respondents; and 3. sociodemographic profiles of the respondents. A total of 120 responses was obtained and the ordinary least squares econometric model was applied to identify the influence of biases on corporate decisions. Findings: The results found showed that managers’ decisions have been influenced by heuristics and biases, especially decisions on starting new projects and raising funds, as it was found that overconfidence bias has prevailed in investment and financing decisions. The study also demonstrated that the decline in sales and lost profitability of Brazilian companies due to Covid-19 have led to bold behavior by managers, as they have sought to reverse the impacts of the pandemic. Resumo Objetivo: Analisar como a Covid-19 tem impactado as políticas de financiamento, estrutura de capital e investimento das empresas brasileiras à luz das finanças comportamentais. Originalidade/valor: O estudo se debruçou sobre a literatura das finanças comportamentais, Teoria dos Prospectos, Teoria do Big Five e Teoria do Pecking Order, com o intuito de fundamentar e explicar as consequências das emoções implícitas nas decisões corporativas e os impactos nas organizações no momento de crise da Covid-19. Design/metodologia/abordagem: Foi utilizado um questionário com 26 perguntas distribuídas em três blocos: 1. decisões de investimentos, financiamentos e estrutura de capital tomadas no primeiro semestre de 2020; 2. dimensões de personalidade dos respondentes; 3. perfis sociodemográficos dos respondentes. Obtiveram-se 120 respostas, e aplicou-se o modelo econométrico mínimos quadrados ordinários para identificar a influência dos vieses nas decisões corporativas. Resultados: Os resultados encontrados evidenciaram que as decisões dos administradores têm sido influenci