Corruption and stock returns of Brazilian firms

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Published: Jun 23, 2021
DOI: https://doi.org/10.12660/rbfin.v19n2.2021.82780
Keywords:
Corruption Event study Sand the wheels Herd effect

Main Article Content

Vitor Fonseca Machado Beling Dias
Federal University of Uberlândia
https://orcid.org/0000-0001-6084-5599
Rodrigo Fernandes Malaquias
Universidade Federal de Uberlândia
https://orcid.org/0000-0002-7126-1051

Abstract




This paper identifies the effect of news reports related to possible involvement in corporate corruption by Brazilian firms on their stock returns in the short term. We employ the event study methodology and consider the period between 2012 and 2019, with a sample of 83 Brazilian firms listed on the B3 and 236 news items. Our main hy- pothesis is supported, since results indicate that this type of event is related to a decrease in stock returns, mainly on the day of disclosure. The results align with the “sand the wheels” perspective. Moreover, we show adjustments in asset price in accordance with the market efficiency theory. We believe that these results can be used by investors in their decision-making process.




Article Details

How to Cite
Fonseca Machado Beling Dias, V. ., & Fernandes Malaquias, R. . (2021). Corruption and stock returns of Brazilian firms. Brazilian Review of Finance, 19(2), 123–150. https://doi.org/10.12660/rbfin.v19n2.2021.82780
Issue
Vol. 19 No. 2 (2021): April-June
Section
Long Paper

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Author Biographies

Vitor Fonseca Machado Beling Dias, Federal University of Uberlândia

Vitor Fonseca Machado Beling Dias holds a Degree in Economic Sciences from Universidade Federal de Uberlândia (UFU). Currently, he is a Master Degree student in the field of Administration (with emphasis in Finance) at UFU.

Rodrigo Fernandes Malaquias, Universidade Federal de Uberlândia

Rodrigo Fernandes Malaquias is an Associate Professor at Universidade Federal de Uberlândia, Brazil. In 2012, he received his PhD in Business Administration from FGV-EAESP, Brazil. In 2015, he was a Visiting Research Scholar at DePaul University in Chicago, USA. His research includes finance, accounting, mobile banking, e-commerce, and cross-country studies. His papers have been published or accepted for publication by peer-reviewed journals, including Accounting Research Journal, Journal of Economic Studies, Research in International Business and Finance, Latin American Business Review, Accounting & Finance Review (USP), International Journal of Information Management, Journal of Electronic Commerce Research, Electronic Commerce Research and Applications, Computers in Human Behavior, Information Development, Information Technology for Development, Journal of Global Information Management, Technology and Disability, Brazilian Review of Finance, Brazilian Business Review, Journal of Operations and Supply Chain Management, among others.