Shares and liquidity are benefited by better corporate governance?: Brazilian market evidence

  • Marcos Antônio de Camargos Faculdade IBMEC
  • Francisco Vidal Barbosa Universidade Federal de Minas Gerais
Keywords: Corporate Governance, Differentiated Levels of Corporate Governance, Share Liquidity, Share Price, Event Study

Abstract

The New Market and Differentiated Levels of Corporate Governance (Novo Mercado e Niveis Diferenciados de Governança Corporativa, NDGC) have disseminated practices for improved governance in order to increase transparency and information for investors and further, to reduce the cost of capital, thereby supposedly increasing share value and liquidity. To analyze this when adhering to NDGC, impact on behavior and liquidity as well as other share and market variables were investigated by an event study. Preferred shares of 32 enterprises segmented in levels I and II, as well as common shares of 17 enterprises were studied. NDGC adherence did not result in creation of wealth for shareholders but increased liquidity especially in the long term for both preferred and common shares while Level II compliance did not influence liquidity more than that level I compliance.

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Published
2010-06-01
How to Cite
Camargos, M., & Barbosa, F. (2010). Shares and liquidity are benefited by better corporate governance?: Brazilian market evidence . REGE Revista De Gestão, 17(2), 189-208. https://doi.org/10.5700/rege394
Section
Finanças