The Role of Stock Liquidity and Outside Blockholders in Monitoring Managers

2008 ◽  
Author(s):  
Scott W. Bauguess
Keyword(s):  
Stock Liquidity

scholarly journals Moderating Role of Financial Market Development on the Relationship between Stock Liquidity and Dividend

2020 ◽  
Vol 16 (2) ◽  
pp. 77-99
Author(s):  
Mohd Ashari Bakri ◽  
Amin Nordin Bany-Ariffin ◽  
Bolaji Tunde Matemilola ◽  
Wei Theng Lau
Keyword(s):  
Emerging Markets ◽  
Financial Market ◽  
Emerging Market ◽  
Investment Strategy ◽  
Market Development ◽  
Stock Liquidity ◽  
Financial Market Development ◽  
The Relationship ◽  
Moderating Role

This article aims to investigate the relationship between stock liquidity and dividend across emerging market countries as well as examined the moderating role of financial market development on the relationship between stock liquidity and dividend. Data were obtained from the World Bank and DataStream databases. The study examined 3,258 listed firms from 22 emerging markets to be extrapolated in the emerging market context. To analyse the data, this article used the panel data Tobit model and panel logistic regression, both with random effects. The analysis revealed that financial market development has a positive moderating effect on the relationship between stock liquidity and dividend by improving local market liquidity and mitigating information asymmetry. The study findings provide information for managers to devise investment strategy in the emerging markets. This article provides new insights into the financial market development moderating role on the relationship between stock liquidity and dividend.

scholarly journals Company Size Growth, Stock Liquidity and Return of Stock: Role of Mispricing

2019 ◽  
Vol 10 (3) ◽  
pp. 67-72
Author(s):  
Tigor Sitorus ◽  
Ibnu Wijaya Pangkato ◽  
Chairul Muriman Setyabudi ◽  
Rahmadsyah Lubis
Keyword(s):  
Company Size ◽  
Stock Liquidity ◽  
Size Growth

Economic policy uncertainty and stock liquidity: the role of board networks in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
William Mbanyele
Keyword(s):  
Economic Policy ◽  
Adverse Effects ◽  
Emerging Market ◽  
Estimation Method ◽  
Policy Uncertainty ◽  
Stock Liquidity ◽  
Content Type ◽  
Economic Policy Uncertainty ◽  
Board Networks

PurposeThe purpose of this study is to examine the role of board networks in promoting stock liquidity when there is high economic policy uncertainty using a sample of Brazilian firms from 2002 to 2015.Design/methodology/approachThe study employs the ordinary least squares estimation method with standard errors clustered at the firm level for preliminary analysis, besides the study employs the two-step GMM dynamic estimation method to deal with potential endogeneity issues.FindingsFirst, the findings show that economic policy uncertainty disproportionately contributes to stock illiquidity and the impact is mainly prominent for high risky companies, small firms and firms in competitive industries. Second, the author provides evidence that board networks promote stock liquidity more via the information channel when economic policy uncertainty is very high.Practical implicationsGiven the adverse effects of economic policy uncertainty on stock liquidity, governments need to swiftly communicate and implement policies that affect the capital market to avoid the drying up of liquidity, which is exacerbated by communication or implementation lags. Also, there is a need for the regulators to continuously encourage the inclusion of independent directors in boards, which helps to increase board monitoring capacity and the firms' ability to respond to changes in the external environment.Originality/valueUnlike other studies that focus on the adverse effects of economic policy uncertainty on firm outcomes, the novel contribution is that the author uncovers the role of board networks in mitigating the negative effects of economic policy uncertainty on stock liquidity.

scholarly journals How Does Split Announcement Affect Stock Liquidity? Evidence from Bursa Malaysia

Risks ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 85
Author(s):  
S. Amir Tabibian ◽  
Zhaoyong Zhang ◽  
Mohsen Jafarian
Keyword(s):  
Panel Data Analysis ◽  
Abnormal Returns ◽  
Fixed Effect Model ◽  
Stock Liquidity ◽  
Effect Model ◽  
Study Methodology ◽  
The Impact ◽  
The Relationship ◽  
Event Study Methodology

This study examines the impact of stock splits on stock liquidity in Bursa Malaysia from 2004–2018. The study uses event study methodology and investigates liquidity changes, the role of liquidity, and the relationship between abnormal returns and liquidity as well. We found a significant liquidity improvement on the splits announcement, announcement of book closing date and split execution date (Ex-date), while it declined after the split Ex-date. The findings also indicate that firms with a low-level liquidity prior to split announcements experienced an increase in liquidity after Ex-date. Using panel data analysis, we find that the fixed effect model is more appropriate than the pooled OLS, and the abnormal announcement returns are driven by stock liquidity.

scholarly journals The Link between Information Transparency and Investment Efficiency: A Literature Review

2018 ◽  
Vol 8 (4) ◽  
pp. 71
Author(s):  
Thi Thanh Huyen Le
Keyword(s):  
Information Disclosure ◽  
Stock Price ◽  
Investment Efficiency ◽  
Quality Of Information ◽  
Stock Liquidity ◽  
Information Transparency ◽  
Firm Investments ◽  
Role Of Information

Investigating the role of information has been recently a hot topic attracting many researchers. A large number of studies have examined the effect of information on cost of capital (Christine A. Botosan, 1997; Diamond & Verrecchia, 1991; Easley & O’Hara, 2004), stock price (Welker, 1995), and stock liquidity (Leuz & Wysocki, 2008). It is demonstrated that the increase in both quantity and quality of information brings benefits to firms as well as the capital markets (Healy & Palepu, 2001). More specifically, many studies indicate the beneficial influence of information disclosure in improving the efficiency of firm investments (Biddle & Hilary, 2006; Biddle, Hilary, & Verdi, 2009; Cheng, Dhaliwal, & Zhang, 2013; Gomariz & Ballesta, 2014; Lai, Liu, & Wang, 2014). This paper presents a review of literature about the relation between information transparency and firms’ investment efficiency. 

scholarly journals Stock Market Liquidity And Dividend Policy In Korean Corporations

2017 ◽  
Vol 33 (4) ◽  
pp. 729 ◽  
Author(s):  
Jeong Hwan Lee ◽  
Bohyun Yoon
Keyword(s):  
Financial Markets ◽  
Dividend Policy ◽  
Empirical Studies ◽  
Explanatory Power ◽  
Negative Relationship ◽  
Market Liquidity ◽  
Stock Liquidity ◽  
International Evidence ◽  
Dividend Payments

The liquidity hypothesis predicts a negative relationship between stock liquidity and dividend payout propensity, i.e., a firm will decide to pay dividends to compensate for the liquidity demand of investors. This study comprehensively examines whether the liquidity hypothesis applies to the sample of Korean firms listed in the KOSPI and KOSDAQ markets. The main results of this paper are as follows. First, the dividend policy in Korean firms does not support the liquidity hypothesis, contradictory to the existing empirical studies. Next, the explanatory power of the liquidity hypothesis is even weaker for the KOSDAQ market, inconsistent with international evidence. Finally, even when we focus on the firm-year observations with non-negligible dividend payments, the liquidity hypothesis does not explain the dividend policy of Korean firms either. Our findings significantly contribute to the literature by robustly confirming the very limited role of the liquidity hypothesis for Korean financial markets.  

The Role of Stock Liquidity in Executive Compensation

2011 ◽  
Vol 87 (2) ◽  
pp. 537-563 ◽  
Author(s):  
Sudarshan Jayaraman ◽  
Todd T. Milbourn
Keyword(s):  
Executive Compensation ◽  
Least Squares ◽  
Stock Prices ◽  
Pay For Performance ◽  
Data Availability ◽  
Ongoing Debate ◽  
Stock Liquidity ◽  
Optimal Contracting ◽  
Increasing Trend

ABSTRACT We explore the role of stock liquidity in influencing the composition of CEO annual pay and the sensitivity of managerial wealth to stock prices. We find that as stock liquidity goes up, the proportion of equity-based compensation in total compensation increases while the proportion of cash-based compensation declines. Further, the CEO's pay-for-performance sensitivity with respect to stock prices is increasing in the liquidity of the stock. Our main findings are supported by additional tests based on shocks to stock liquidity and two-stage least squares specifications that mitigate endogeneity concerns. Our results are consistent with optimal contracting theories and contribute to the ongoing debate about the increasing trend of both equity-based over cash-based compensation and the sensitivity of total CEO wealth to stock prices rather than earnings. Data Availability: Data used for this study are derived from publicly available sources.

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