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
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: Suggested Citation