Does Transparency Pay Off in the Long-Run? Evidence from Stock Market Segment Switches in Brazil
42 Pages Posted: 10 Oct 2018 Last revised: 12 Jul 2019
Date Written: July 10, 2019
We investigate the long-run effects of different levels of transparency in the stock market. We consider Brazilian firms that switched from the traditional segment to the more transparent Nível 1, Nível 2 or Novo Mercado since 2000. We document that higher levels of transparency result in significantly higher abnormal stock returns in the long-run, controlling for firm and time fixed effects. The positive impact of transparency has increased after the Global Financial Crisis, market microstructure improved, and the market impact is stronger for financially healthy firms. The evidence suggests that higher transparency paid off for Brazilian firms in the long-run.
Keywords: Transparency, Corporate Governance, Listing Segments, Long-Run Performance
JEL Classification: G10, G14, G30
Suggested Citation: Suggested Citation