Financial Situation Unique Indicator for Electric Sector Firms

Aracéli Cristina de S. Ferreira, Vinicius Mothe Maia, Dilo S. de Carvalho Vianna, Juliana Molina Queiroz


This paper develops a unique indicator to identify the financial situation of firms in the electric sector in Brazil. The National Electric Energy Agency (ANEEL) regulates this sector through five dimensions: indebtedness, efficiency, investment, profitability, and pay-out ratio. Each of these dimensions contains one or two indicators. Based on these indicators, we develop a unique indicator that shows companies' financial situation. To create a unique indicator, we follow the idea of Altman’s solvency indicator. But, we use a logit regression. Our dependent variable is Global Performance of Continuity which indicates the financial situation of the firm. Our independent variables are based on the five dimensions of the ANEEL indicators for financial situation. We collect data from 2011 to 2018. This research follows three main steps: (1) Collection of the data from the ANEEL database; (2) Creation of variables based on ANEEL’s five dimensions of performance; and (3) Econometric proceedings with variables according to ANEEL’s data and indicators of each dimension. First, we estimate one regression with all variables created based on ANEEL’s five dimensions. Then, we make improvements to find a more suitable model with different combinations of variables. We chose the best model by analysing the Akaike information criterion (AIC). Our results show that the unique indicator we create to evaluate firm performance is based on Debt, Efficiency, Investment (CapexA) and the Pay-out Ratio.

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Copyright (c) 2021 Aracéli Cristina de S. Ferreira, Vinicius Mothe Maia, Dilo S. de Carvalho Vianna, Juliana Molina Queiroz

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online) Email:

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