Government ownership and stock liquidity: Evidence from China

Ding, Mingfa; Suardi, Sandy

doi:10.1016/j.ememar.2019.100625

Cited by 33 publications

(22 citation statements)

References 43 publications

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“…Interestingly, the control variable indicating whether a firm is state‐owned is highly significant in all regressions with the expected signs, and the state‐owned firms have smaller spreads and greater order book depth. This is in line with the view espoused by Ding and Suardi () who states that a major state shareholder in a firm indicates government confidence in it and serves as a more efficient monitor than a nonstate shareholder. It cannot only enhance investors’ willingness to invest and trade in this stock but also enhance the firm's corporate governance, thereby improving liquidity by increasing trading activity and informational efficiency in the market.…”

Section: Resultssupporting

confidence: 90%

“…Finally, we include two control variables unique to China's stock market: a state‐owned enterprise (SOE) dummy (STATE) and the nontradable share ratio (NT). China's stock market is characterized by the dominance of SOEs, and previous studies find that whether a firm is state‐owned does matter for stock liquidity due to its links to the government (Ding, ). Therefore, we control for SOE dummy as a proxy for political connections, by defining a dummy variable taking the value of 1 if a firm is state‐owned.…”

Section: Measurement Of Variables and Model Specificationsmentioning

confidence: 99%

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Foreign Institutional Investment, Ownership, and Liquidity: Real and Informational Frictions

Ding

Nilsson

Suardi

2017

The Financial Review

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The literature widely documents the negative liquidity impact of foreign participation in firms that permit high foreign institutional ownership. This paper employs a unique setting for the limited participation of qualified foreign institutional investors (QFIIs) in China's A‐share market and examines how this impacts on stock liquidity in emerging markets. Contrary to the findings in the literature, foreign investor participation helps enhance the liquidity of affected stocks by promoting trade activities and price discovery. The improvement in liquidity does not occur through the information friction channel, but rather the real friction channel. Our results are robust to endogeneity issue and the possible influence of the global financial crisis, industry effects and the stock exchange. Further, the liquidity improving effects of QFII are even stronger when the analysis is performed on a subsample of QFII firms.

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Section: Resultssupporting

confidence: 90%

Section: Measurement Of Variables and Model Specificationsmentioning

confidence: 99%

Foreign Institutional Investment, Ownership, and Liquidity: Real and Informational Frictions

Ding

Nilsson

Suardi

2017

The Financial Review

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“…We show that these countervailing influences contribute to a non-monotonic relation between state ownership and stock liquidity. Furthermore, our study extends Ding and Suardi (2019) , who find that state ownership is associated with higher stock liquidity, in the context of China.…”

Section: Introductionsupporting

confidence: 75%

State ownership and stock liquidity: Evidence from privatization

Boubakri

Chen

Ghoul

et al. 2020

Journal of Corporate Finance

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“…Therefore, government engagement in stock trading can elevate investors' enthusiasm to invest more in SOEs and enjoy the benefits attached with government affiliation. Consequently, SOEs' equity offering often improves stock liquidity (Ding & Suardi, 2019); therefore, investors intend to buy less equity than private enterprises offer. Thus, the study expects that the explanatory power of H1 and H2 could be higher in SOEs than the private enterprises.…”

Section: The Institutional Setting Of Chinese Enterprises Stock Liquidity and Trade Credit Strategiesmentioning

confidence: 99%

Stock Liquidity and Corporate Trade Credit Strategies: Evidence From China

Shahzad

Liu

Luo

2021

Journal of Business Economics and Management

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This study investigates the nexus of stock liquidity and trade-credit policies in China from 2002 to 2017. The estimates are robust to alternative proxies, various fixed-effects, and the exogenous impact of Chinese split share structure reforms (SSSR) 2005-06 is investigated through the difference-in-difference analysis. The results validate that stock liquidity significantly impacts firms’ capacity to produce more trade credit supplies and less reliant on trade credit demand. The study applied SUEST analysis to investigate the effect of the Chinese institutional setting. The nexus of stock liquidity and trade credit strategies is substantial in state-owned enterprises. Additional analysis revealed that the said association is more visible to credit-constrained and equity-reliant enterprises. The policymakers should focus on market liquidity because it elevates firms’ capacity to mobilize capital through trade credit provisions. The micro aspect of this study suggests that stock liquidity allows managers to shape non-price competitive strategies and avoid excessive usage of trade credits.

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Government ownership and stock liquidity: Evidence from China

Cited by 33 publications

References 43 publications

Foreign Institutional Investment, Ownership, and Liquidity: Real and Informational Frictions

Foreign Institutional Investment, Ownership, and Liquidity: Real and Informational Frictions

State ownership and stock liquidity: Evidence from privatization

Stock Liquidity and Corporate Trade Credit Strategies: Evidence From China

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