Abstract
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.