Published in:Instituto de Empresa Business School Working Paper ; No. WP06-08
Extent:
1 Online-Ressource (24 p)
Language:
Not determined
DOI:
10.2139/ssrn.1014656
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 14, 2006 erstellt
Description:
We study the market price reaction and liquidity impact that firms experience when they are incorporated into the differentiated corporate governance listing segments of the Sao Paulo Stock Exchange. The Brazilian market is of special interest since it allows us to analyze the effect of improved governance while keeping the market microstructure unchanged. The market price reaction is positive and significant when a firm announces its decision to commit to greater transparency and minority shareholder protection. We also find that shares with voting rights experience a stronger price reaction than non-voting shares. The liquidity impact of improved governance is also positive since trading costs decrease after incorporation into the differentiated segments. This liquidity enhancement is more pronounced for shares with voting rights. Our results imply that stock exchanges can play a critical role in leading, not following, the implementation of improved governance standards in countries with weak investor protection regulation