Valuation of B3-Listed Brazilian IT Companies

Abstract: This study presents valuation methods to compare market value and the present value of discounted cash flow, using companies listed on the Brazilian stock market B3, with data from 2009 to 2014. The research adopted a qualitative-quantitative approach and a hypothetical-deductive method to examine ten Brazilian IT companies. This study fills a gap in the literature, which shows few studies on future cash flow to be generated by Brazilian IT companies. The sample collected in Brazil was then compared to a sample of 25 NASDAQ-listed US IT companies, revealing that US companies have higher market value than discounted cash flow. Finally, the study suggests further research to identify the possible correlations of other relevant economic variables, such as the variation of the exchange rate, interest rate, or GDP, which are elements that may influence investors’ decision-making.

Key words: valuation; market value; information technology

JEL code: G32