Analysis of the long-term effects of the voluntary bid rule on Brazilian stock

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstact

The mandatory bid rule (also known as tag-along rights) is an important corporate governance mechanism that emerges in a company takeover and consists of acquirers granting non-controlling investors a price similar to the one made to the controlling shareholders. The goal of this research is to analyze if Brazilian companies that grant tag-along rights voluntarily have higher valuation and liquidity. We show evidence that the voluntary bid rule significantly affects common shares’ liquidity. In contrast, we find no significant relation between firm valuation and tag-along rights.

Keywords: Mandatory Bid Rule, Corporate Governance, Brazil

JEL Classification: G32, G34

Received: 13.10.2023
Accepted: 24.10.2023

How to cite: Carvalhal, A., & Filho, J. S. (2024). Analysis of the long-term effects of the voluntary bid rule on Brazilian stock. In T. O. Sigurjonsson, A. Kostyuk, & D. Govorun (Eds.), Corporate governance: Participants, mechanisms and performance (pp. 39–43). Virtus Interpress. https://doi.org/10.22495/cgpmpp8