Empirical analysis of the impact of adhering to Bovespa's differentiated levels of corporative governance upon stockholder's returns

Abstract

Adoption of corporative governance practices allegedly leads to greater transparency of company policies, strategies and actions thereby increasing asset values especially shares. For this reason an analysis was made to identify behavior of abnormal returns during adoption of the Bovespa Differentiated Levels of Corporative Governance by ten companies between 2001 and 2003 and to ascertain the impact on stockholders. Event Study methodology was used and abnormal returns were calculated by the Model of Returns Adjusted to Market, in logarithmic form. The conclusion was that adoption of the Bovespa Corporative Governance practices by ten companies did not generally bring about abnormal returns or create wealth for stockholders.