The level of corporate finance literacy in Portugal.

O nível de literacia de finanças corporativas em Portugal
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The level of corporate finance literacy in Portugal.

The level of corporate finance literacy in Portugal is a very relevant topic for the country’s economic development. Corporate finance is the set of decisions and activities related to the management of companies’ financial resources, such as investment, financing, distribution of dividends, project evaluation and risk management. Corporate finance literacy is the ability to understand and apply concepts and tools in business decision making.

A study carried out by the Universidade Católica Portuguesa in 2019 revealed that the level of corporate finance literacy in Portugal is low, compared to other European countries. The study assessed the knowledge and confidence of Portuguese managers on topics such as capital structure, cost of capital, dividend policy, company valuation and risk management. The results showed that Portuguese managers have difficulties in applying the theoretical concepts of corporate finance in practice, and that they have little confidence in their financial decisions.

The low level of corporate finance literacy in Portugal can have negative consequences for the competitiveness and sustainability of Portuguese companies, especially in a context of globalization or economic uncertainty. Companies that do not have efficient financial management may miss profitable investment opportunities, take excessive or inappropriate risks, have difficulties in obtaining external financing, or have an inadequate dividend distribution policy. These situations can compromise the profitability, solvency and continuity of companies.

To improve the level of corporate finance literacy in Portugal, it is necessary to invest in the training and education of company managers and employees, as well as in disseminating and raising awareness of the concepts and good practices of corporate finance. Training can be carried out through courses, workshops, seminars, webinars or other modalities, adapted to the needs and objectives of companies. Education can be promoted from basic education to higher education by integrating corporate finance into school and academic curricula. Dissemination and awareness-raising can be done through the media, business associations, regulatory bodies or other initiatives.

The level of corporate finance literacy in Portugal is a challenge and an opportunity for Portuguese companies. By improving their knowledge and confidence in financial decisions, companies can increase their efficiency, competitiveness and resilience in the global market.

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