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

39 Pages Posted: 10 Oct 2018

See all articles by Luiz Moura

Luiz Moura

Fundação Getulio Vargas

Lars Norden

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

Date Written: September 1, 2018

Abstract

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

Moura, Luiz and Norden, Lars, Does Transparency Pay Off in the Long-Run? Evidence from Stock Market Segment Switches in Brazil (September 1, 2018). Available at SSRN: https://ssrn.com/abstract=3243023 or http://dx.doi.org/10.2139/ssrn.3243023

Luiz Moura

Fundação Getulio Vargas ( email )

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

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