The Value of Firms’ Voluntary Commitment to Improve Transparency : The Case of Special Segments on Euronext

This paper examines whether firms' commitment to increase transparency affects liquidity by studying firms' voluntary decision to be listed in “special segments” created by Euronext. My results show that transparency affects firm's stock market liquidity, strengthening their positive relationships consistent with the existing literature. In contrast, when similar market regulation is imposed on all listed firms I find negative effects on liquidity for all firms listed on the exchange. A market-wide requirement to increase transparency has effects that differ from those of voluntary commitments to similarly increase transparency