Effects of large shareholding on information asymmetry and stock liquidity

Attig, Najah; Fong, Wai‐Ming; Gadhoum, Yoser; Lang, Larry H.P.

doi:10.1016/j.jbankfin.2005.12.002

Cited by 228 publications

(153 citation statements)

References 50 publications

(64 reference statements)

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“…Also, in China, Chu et al (2015) used a sample from Chinese listed firms for the years 2005 to 2009 and confirmed that control-ownership divergence negatively affected market liquidity. This finding is aligned with those reported by Attig et al (2006) in the case of Canada. They also found control-ownership divergence negative influence on market liquidity is higher in firms having serious agency issues and information asymmetry.…”

Section: Ownership Structure and Stock Market Liquiditysupporting

confidence: 92%

“…Additionally, Sarin et al (1996) used a sample of 786 listed U.S. stock for the years April-December 1985 and found that greater insider and Heflin and Shaw (2000) used a sample of 260 listed U.S. stocks in their study and found that firms having greater blockholder ownership also displayed larger quoted and effective spreads, a larger adverse selection spread, and smaller quoted depths. Moreover, in Canada, Attig et al (2006) used a sample of publicly-traded firms and reported a difference between ultimate control and ownership that contributes to the widening of the bid-ask spread.…”

Section: Ownership Structure and Stock Market Liquiditymentioning

confidence: 99%

“…In particular, block shareholders lessen market liquidity because of their access to private information among investors and the market risk increase (Heflin & Shaw, 2000;Rubin, 2007). For instance, Attig et al (2006) indicated that large control rights could trigger poor disclosure among Canadian firms, and this leads to low liquidity owing to the selfish behaviors of ultimate shareholders who hold large shareholdings. Such poor disclosure nurtures asymmetric information issues in financial markets and ultimately, this leads to reduced market liquidity (Glosten & Therefore, the combination of corporate finance and microstructure enables the present study to contribute to literature in several ways.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Governance, Ownership Structure and Stock Market Liquidity in Saudi Arabia: A Conceptual Research Framework

Alsahlawi

Ammer

2017

AFR

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This paper aimed to provide a review of the literature concerning the effects of corporate governance and ownership structure on the devices of market microstructure. It provided a clear overview of empirical archival studies in literature regarding the way corporate governance and ownership structure mechanisms influence market liquidity, with focusing on the Saudi institutional setting. It aimed to pinpoint the differences and similarities in empirical outcomes of studies and determine the areas that call for further exploration. On the basis of the thorough review of literature and the theoretical basis, our study proposed a conceptual research framework. The framework is based on the premise that effective corporate governance can lead to enhanced disclosure quality, which in turn, lead to mitigating the information asymmetry and ultimately, enhanced market liquidity. Although theoretical studies argued the presence of the relationship between corporate governance, ownership and liquidity, we find that outcomes from empirical studies are still mixed. Majority of extant studies, with majority in the context of the U.S. firms, provide ambiguous results, making it challenging to reconcile the differences among them. Our paper provides important guidance for both new and experienced researchers, and it has implications for stock exchange authorities in terms of adopting effective regulatory policies and efficient trading systems to tackle information asymmetry.

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Section: Ownership Structure and Stock Market Liquiditysupporting

confidence: 92%

Section: Ownership Structure and Stock Market Liquiditymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corporate Governance, Ownership Structure and Stock Market Liquidity in Saudi Arabia: A Conceptual Research Framework

Alsahlawi

Ammer

2017

AFR

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“…For instance, dominant shareholders can expropriate minority shareholder. In practice, they provide funds only if they have private information about projects they would invest in which decreases stock liquidity (Attig et al, 2006). Most empirical studies do not provide evidence that minority expropriation decreases liquidity in developed markets.…”

Section: Corporate Governance Information Asymmetry and Stock Liquiditymentioning

confidence: 99%

“…Whether they are conducted in developed or emerging markets, to our knowledge, these studies have tested effects of one single attribute of corporate governance on stock liquidity: ownership structure (Rubin, 2007 andAttig et al 2006), board of directors (Kanagaretnam et al, 2007) and voluntary information (Chen et al, 2007 andHaddad et al, 2009). In addition to the explanation of the link between corporate governance and stock liquidity, they argue that corporate governance mechanisms mitigate information asymmetry problems which improve stock liquidity.…”

Section: Introductionmentioning

confidence: 99%

Does Corporate Governance Affect Stock Liquidity in the Tunisian Stock Market?

Loukil¹,

Yousfi

2012

SSRN Journal

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Abstract:The aim of the current paper is to study the link between the effects of corporate governance on information asymmetry problems and stock liquidity in the Tunisian Stock Market. We use a sample of 49 Tunisian firms listed between 1998 and 2007. Our results show that corporate governance has direct and indirect effects on stock liquidity. Threat of expropriation exerted by family and foreign shareholders discourages reluctant investors, which decreases stock liquidity. In contrast, they invest their capital in State controlled firms.In fact, State is regarded as an effective controller rather than a shareholder. The State involvement in Tunisian firms is considered as state guarantee for investors, which increases stock liquidity. Our results provide evidence that some attributes of corporate governance improve stock liquidity because they reduce information asymmetry.

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