Institutional Investors and Stock Market Liquidity: Trends and Relationships

The study focused on the moderation role of information asymmetry (IA) that plays a vital role between Stock market liquidity (SML) and Institutional investors (I.I) in textile sector of Pakistan stock exchange (PSX). Among total population of 155 companies, a sample of 150 textile companies is chosen with the help of convenient sampling technique for a period of 10 years (2009-2018). The results of Pre-moderation panel data regression analysis show that there is insignificant effect of I.I on SML while size (SZ), leverage (LEV) and growth (GR) have significant effect on SML. Further, post-moderation effect of IA, which is the uniqueness of the study, indicates a stronger significant effect of SZ, LEV and GR on SML as compare to pre-moderation regression results, which evident that IA do has a significant role between explanatory variables and SML. The results of the study are supporting the signaling theory on the base of moderation of IA that increases the significance level between I.I and SML.

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Foreign Institutional Investors and Stock Market Liquidity in China: State Ownership, Trading Activity and Information Asymmetry

SSRN Electronic Journal ◽

10.2139/ssrn.2241832 ◽

2013 ◽

Cited By ~ 4

Author(s):

Mingfa Ding ◽

Sandy Suardi ◽

Birger Nilsson

Keyword(s):

Stock Market ◽

Information Asymmetry ◽

Institutional Investors ◽

State Ownership ◽

Market Liquidity ◽

Trading Activity ◽

Foreign Institutional Investors ◽

Stock Market Liquidity

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Do Institutional Investors Affect Stock Market Liquidity? The Moderating Role of Firm Size in Fuel and Energy Sector of Pakistan

Global Management Sciences Review ◽

10.31703/gmsr.2020(v-ii).01 ◽

2020 ◽

Vol V (II) ◽

pp. 1-8

Author(s):

Muhammad Arif

Keyword(s):

Stock Market ◽

Firm Size ◽

Institutional Investors ◽

Control Variable ◽

Energy Sector ◽

Market Liquidity ◽

Undue Influence ◽

Moderator Variable ◽

Stock Market Liquidity ◽

Fuel And Energy Sector

The current study is unique due to the consideration of firm size that is moderator variable between Institutional Investors and stock market liquidity in Fuel and Energy sector of Pakistan Stock Exchange because majority of the previous studies have been used SZ as a control variable. The secondary panel data of the sample firms for a period of 10 years (2009-2018) have been analyzed through Gretel software while multiple regression and moderation has been applied. The study concludes that SZ, as moderator, has significant role between I.I and ML along with other explanatory variables like Tobin Q ratio (Tob,Q). Therefore, big size I.I has considerable influence over ML as compared to Small or average size I.I. The study recommends that ML can be increased by reducing the undue influence of the large I.I through establishing proper legislation which will safeguard various parties such as small I.I, medium I.I and individual investors in capital markets.

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Institutional investors, information asymmetry and stock market liquidity in France

International Journal of Managerial Finance ◽

10.1108/ijmf-08-2013-0086 ◽

2015 ◽

Vol 11 (1) ◽

pp. 44-59 ◽

Cited By ~ 12

Author(s):

Aymen Ajina ◽

Faten Lakhal ◽

Danielle Sougné

Keyword(s):

Stock Market ◽

Information Asymmetry ◽

Institutional Investors ◽

Pension Funds ◽

Market Liquidity ◽

Least Square ◽

Institutional Setting ◽

Stock Liquidity ◽

Content Type ◽

Stock Market Liquidity

Purpose – The purpose of this paper is to examine the effect of institutional investors’ ownership and type on information asymmetry and stock market liquidity in France. Design/methodology/approach – The sample includes 162 French-listed firms from 2007 to 2009. The methodology relies on linear regressions using the method of ordinary least square. Before examining the interaction between liquidity and institutional investors, the authors check for the existence of the endogeneity problem by applying the Durbin-Wu-Hausman test of Davidson and MacKinnon (1993). The results of the endogeneity test show that institutional investors’ ownership and stock liquidity are endogenous. A simultaneous equation model using the double least square method is then tested to address this problem. Findings – The findings show that the proportion of institutional investors has a positive and significant effect on stock-market liquidity, which confirms the signal theory and trading hypothesis. These investors perform high trading activity which favorably affects market liquidity. The results also show that pension funds improve stock liquidity. This result suggests that pension funds manage huge assets decreasing transaction costs and improving liquidity. They display a positive signal to the market about more transparency and a low level of informational asymmetry. Practical implications – These results highlight the institutional investors’ role in defining the level of liquidity on the French market. The findings also stress the relevance of developing institutional investors’ demand for the Paris market in order to better assess firm value, protect minority ownership and improve market liquidity. Originality/value – In the French institutional setting, institutional investors act as a control device since minority shareholder interests are less protected than in Anglo-American counterparts. This result highlights the significant role of institutional investors in corporate governance structures and on financial markets. Their presence is a guarantee for minority interest protection and for more liquid stocks.

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