Abstract
We investigate the long-run effects of higher standards of corporate governance in the stock market. We consider Brazilian firms that switched from the traditional segment to the Nivel 1, Nivel 2 or Novo Mercado since 2000. We document that higher standards of governance result in significantly higher abnormal stock returns in the long-run, controlling for firm and time fixed effects. The positive impact has increased after the Global Financial Crisis, market microstructure improved, and the market impact is stronger for financially healthy firms. The evidence suggests that committing to higher standards of corporate governance paid off for Brazilian firms in the long-run.
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