Corporate Governance and Liquidity

2010 ◽  
Vol 45 (2) ◽  
pp. 265-291 ◽  
Author(s):  
Kee H. Chung ◽  
John Elder ◽  
Jang-Chul Kim
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Alternative Model ◽  
Empirical Relation ◽  
Price Impact ◽  
Market Liquidity ◽  
Lower Probability ◽  
Market Quality ◽  
Stock Market Liquidity ◽  
Liquidity Measures

AbstractWe investigate the empirical relation between corporate governance and stock market liquidity. We find that firms with better corporate governance have narrower spreads, higher market quality index, smaller price impact of trades, and lower probability of information-based trading. In addition, we show that changes in our liquidity measures are significantly related to changes in the governance index over time. These results suggest that firms may alleviate information-based trading and improve stock market liquidity by adopting corporate governance standards that mitigate informational asymmetries. Our results are remarkably robust to alternative model specifications, across exchanges, and to different measures of liquidity.

Corporate Governance and Stock Market Liquidity

2019 ◽  
Author(s):  
Erick Rading Outa ◽  
Nelson Maina Waweru ◽  
Peterson K Ozili
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Market Liquidity ◽  
Stock Market Liquidity

scholarly journals The Role of Ownership Structure and Board Characteristics in Stock Market Liquidity

2021 ◽  
Vol 9 (4) ◽  
pp. 74
Author(s):  
Wajih Abbassi ◽  
Ahmed Imran Hunjra ◽  
Suha Mahmoud Alawi ◽  
Rashid Mehmood
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Ownership Structure ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Fixed Effect Model ◽  
Market Liquidity ◽  
Board Characteristics ◽  
Stock Market Liquidity ◽  
The Impact

Corporate governance plays a significant role in the value of shareholders and share prices, hence stock market liquidity is affected. Previous research has mainly focused on the issue in developed markets, whereas in developing countries there is a need to analyze the influence of corporate governance on stock market liquidity. Therefore, the present study aims to examine the impact of ownership structure and board characteristics on stock market liquidity of non-financial firms of South Asian countries such as Pakistan, Sri Lanka, Bangladesh, and India. The data in the study is collected from the DataStream for the 2011–2020 period. The study uses a fixed effect model for the analysis of the data and hypotheses testing and generalized method of moments (GMM) is used to check the robustness of the results. The findings of the study indicate that institutional ownership, board size, board independence, and CEO duality have a significant and positive impact on stock market liquidity, whereas managerial ownership has a significant and negative effect on stock market liquidity.

Corporate Governance, Legal System, and Stock Market Liquidity: Evidence Around the World

2012 ◽  
Vol 41 (6) ◽  
pp. 686-703 ◽  
Author(s):  
Kee H. Chung ◽  
Joon-Seok Kim ◽  
Kwangwoo Park ◽  
Taeyoon Sung
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Legal System ◽  
Market Liquidity ◽  
The World ◽  
Stock Market Liquidity

Corporate governance strength and stock market liquidity in Malaysia

2017 ◽  
Vol 13 (5) ◽  
pp. 592-610 ◽  
Author(s):  
Hamdan Amer Al-Jaifi ◽  
Ahmed Hussein Al-rassas ◽  
Adel Ali AL-Qadasi
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Internal Audit ◽  
Market Liquidity ◽  
Estimation Methods ◽  
Content Type ◽  
External Monitoring ◽  
Governance Effectiveness ◽  
Stock Market Liquidity ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate governance score that captures both internal monitoring mechanisms (board of directors’ characteristics, audit committee’s characteristics and internal audit function) and external monitoring mechanism (audit quality). Design/methodology/approach The study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression and several estimation methods such as two-stage least squares using instrumental variables (IV-2SLS) and dynamic GMM are employed. Findings This study finds a significant positive association between corporate governance effectiveness and stock market liquidity. The finding is robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias. Research limitations/implications This result implies that the firms with effective monitoring mechanisms mitigate information asymmetry which leads to less adverse selection problems among traders. Practical implications This study provides implications for regulators to help design regulations that enhance stock market liquidity. This study could also help investors and traders to formulate their trading decisions, and enables firms to know the importance of strengthening the corporate governance monitoring mechanisms. Originality/value This study constructs a corporate governance effectiveness measure by combining both internal and external monitoring mechanisms. These mechanisms have not been constructed together in one score in the corporate governance literature and the impact of internal audit function, as an internal monitoring mechanism on liquidity, has yet to be examined.

Corporate Governance and Stock Market Liquidity

2016 ◽  
Vol 5 (3) ◽  
Author(s):  
Manjit Kaur Sidhu
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Information Disclosure ◽  
Market Liquidity ◽  
Manufacturing Companies ◽  
Governance Practices ◽  
Stock Market Liquidity ◽  
The Relationship ◽  
Corporate Information

Corporate governance has an impact on both quantity and quality of corporate information disclosure which affects the level of information asymmetry and thus impacts the changes in market liquidity of stock. This article attempts to discern the relationship between corporate governance and the stock market liquidity of Indian manufacturing companies included in the S&P BSE 100 Index during the period 2009-2012 by invoking pooled regression model. The empirical results support corporate governance implications of stock market liquidity as measured by Amivest measure (1985), that is, better governed companies has higher liquidity. The results of the present study are in support of arguments made by Chung, Elder, and Kim (2010), i.e., firms may improve stock market liquidity by adopting corporate governance practices that mitigate informational asymmetries.

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