Does Transparency Pay Off in the Long-Run? Evidence from Stock Market Segment Switches in Brazil
39 Pages Posted: 10 Oct 2018
Date Written: September 1, 2018
We study the stock market reaction to Brazilian firms’ segment switches that are associated with different levels of transparency. We consider switches from the traditional segment to the Level 1, Level 2, or the New Market. We find that higher levels of transparency result in significantly higher abnormal stock returns in the short-run and also in the long-run. Furthermore, different measures of market liquidity improve significantly and the market reaction to higher levels of transparency is larger when firms are financially healthy. The evidence suggests that committing to higher transparency paid off for Brazilian firms in the long-run.
Keywords: Transparency, Corporate Governance, Listing Segments, Event Study, Brazil
JEL Classification: G10, G14, G30
Suggested Citation: Suggested Citation