Does Good Corporate Governance Pay Off in the Long-Run? Evidence from Stock Market Segment Switches in Brazil

44 Pages Posted: 10 Oct 2018 Last revised: 18 Oct 2019

See all articles by Luiz Moura

Luiz Moura

Universidade Federal do Rio de Janeiro

Lars Norden

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE); Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças

Date Written: October 17, 2019

Abstract

We investigate the long-run effects of higher standards of corporate governance in the stock market. We consider Brazilian firms that switched from the traditional segment to the Nível 1, Nível 2 or Novo Mercado since 2000. We document that higher standards of governance result in significantly higher abnormal stock returns in the long-run, controlling for firm and time fixed effects. The positive impact has increased after the Global Financial Crisis, market microstructure improved, and the market impact is stronger for financially healthy firms. The evidence suggests that committing to higher standards of corporate governance paid off for Brazilian firms in the long-run.

Keywords: Corporate Governance, Disclosure, Listing Segments, Long-Run Performance

JEL Classification: G10, G14, G30

Suggested Citation

Moura, Luiz and Norden, Lars, Does Good Corporate Governance Pay Off in the Long-Run? Evidence from Stock Market Segment Switches in Brazil (October 17, 2019). Available at SSRN: https://ssrn.com/abstract=3243023 or http://dx.doi.org/10.2139/ssrn.3243023

Luiz Moura

Universidade Federal do Rio de Janeiro ( email )

Av. Pasteur 250
Rio de Janeiro, 22290-240
Brazil

Lars Norden (Contact Author)

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE) ( email )

Rua Jornalista Orlando Dantas 30
Rio de Janeiro, 22231-010
Brazil
+552130832431 (Phone)

HOME PAGE: http://www.larsnorden.de

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil

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