State ownership and stock liquidity: Evidence from privatization

Boubakri, Narjess; Chen, Ruiyuan; Ghoul, Sadok El; Guedhami, Omrane; Nash, Robert C.

doi:10.1016/j.jcorpfin.2020.101763

Cited by 33 publications

(37 citation statements)

References 102 publications

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“…Our data consist of 574 firms from 64 countries privatized during 1981–2014. This sample compares favorably with those used in recent studies of privatized firms, such as Borisova and Megginson ( 2011 ), with a sample of 60 firms from 14 countries, Boubakri et al ( 2013 ), with 385 firms from 57 countries, and Boubakri et al ( 2020 ), with 473 firms from 53 countries.…”

Section: Sample Variables and Descriptive Statisticsmentioning

confidence: 80%

“…We argue that state ownership may create an advantage with respect to access to finance because SOEs benefit from implicit government guarantees, tax discounts, preferential access to credit, and other forms of soft budget constraints, particularly during times of financial distress (Borisova, Fotak, Holland, & Megginson, 2015 ; Borisova & Megginson, 2011 ; Boubakri, El Ghoul, Guedhami, & Megginson, 2018 ; Faccio, Masulis, & McConnell, 2006 ; Holland, 2019 ; Kornai et al, 2003 ; Nash, 2017 ; Boubakri, Chen, El Ghoul, Guedhami, & Nash, 2020 ). It follows that, as the level of state ownership increases, SOEs should suffer less from financial constraints and should have greater access to finance (Holland, 2019 ).…”

Section: State Ownership Country- and Firm-level Boundary Conditionsmentioning

confidence: 99%

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International evidence on state ownership and trade credit: Opportunities and motivations

et al. 2021

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Recent events, most notably the Global Financial Crisis and the COVID-19 pandemic, have made it increasingly apparent that liquidity is synonymous with corporate survival. In this paper, we explore how governments can fulfill an important need as suppliers of liquidity. Building on the financing advantage view of state ownership, we theorize how state-owned enterprises (SOEs) may provide capital by offering trade credit to customer firms. The data indicate a positive relation between the level of state ownership and the provision of trade credit. Using an institution-focused framework, we further determine that the nation’s institutional environment systematically affects the opportunities and motivations for SOEs to grant trade credit. Specifically, we find that SOEs grant more trade credit in countries with less developed financial markets, weaker legal protection of creditors, less comprehensive information-sharing mechanisms, more collectivist societies, left-wing governments, and higher levels of unemployment. Firm-level factors also influence the credit-granting decisions of SOEs, with SOEs with lower levels of state ownership and higher extents of internationalization offering lower amounts of trade credit. Overall, our study offers novel insights regarding the important role of state-owned firms as providers of liquidity. Electronic supplementary material The online version of this article (10.1057/s41267-021-00406-5) contains supplementary material, which is available to authorized users.

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Section: Sample Variables and Descriptive Statisticsmentioning

confidence: 80%

Section: State Ownership Country- and Firm-level Boundary Conditionsmentioning

confidence: 99%

International evidence on state ownership and trade credit: Opportunities and motivations

et al. 2021

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“…Similarly, companies with weaker management may have reduced internal resources to curtail the "grabbing hand" of informal nonshareholding political connections. This would heighten demand for government-related shareholders to do so via demanding higher dividends (Benjamin et al 2016;Boubakri et al 2020;Yu and Wang 2020).…”

Section: Resultsmentioning

confidence: 99%

“…Hence, the negative association between capital expenditure adjustment and the existence of a longstanding, informal political connection appears to be driven by companies with low corporate governance quality. This may partially reflect the presence of a "grabbing hand" effect in Malaysia (i.e., the informal political connection may expropriate corporate resources, leaving a diminished resource base available, for appropriation of dividends (Boubakri et al 2020;Yu and Wang 2020)). "Grabbing hand" mechanisms, in Malaysia, may be facilitated by regulators being partially "captured" by powerful businessmen and politicians (Vithiatharan and Gomez 2014).…”

Section: Discussionmentioning

confidence: 99%

The Influence of Government Shareholding on Dividend Policy in Malaysia

Sinnadurai

Subramaniam

Devi

2021

IJFS

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We investigate the association between dividend policy and government shareholding, using Malaysian data. We hypothesize a positive association. We contribute to the literature about dividend policy. Unique features of our study include adaptations to the Malaysian institutional setting, with respect to usage of dividend relevance theory, research methodology, and data collection. The methodology entails two-stage least squares regressions. Dividend payout and dividend yield are the dependent variables in tests of the research hypothesis. The independent variable of interest measures ownership by government-related institutional investors. The sample comprises 1190 company-years, over the investigation period 2006–2013. The results support our hypothesis. The evidence suggests that this support principally emanates from companies with low-quality corporate governance.

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“…They have been studied in the form of investor attention, media coverage, and episodes of sensational news exogenous to the market (Aouadi et al, 2018 ; Peress and Schmidt, 2020 ; Shyu et al, 2020 ; Cheng et al, 2021 ). Market structure reforms, such as state ownership transformation and tick size pilot programs, are still popular determinants of stock liquidity (Boubakri et al, 2020 ; Chung et al, 2020 ). Research has been conducted on the determinants of stock liquidity from very fresh perspectives, such as lawyer CEOs, mandatory CSR expenditure, as well as oil supply and demand shocks (Pham, 2020 ; Roy et al, 2022 ; Zhang and Wong, 2022 ).…”

Section: Introductionmentioning

confidence: 99%

Predictive and Contemporaneous Power of the Determinants of Stock Liquidity

Xie

Jin

2022

Front. Psychol.

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This study constructs nine (five) idiosyncratic (systematic) variables to test the predictive and contemporaneous power of the determinants of stock liquidity. We select A shares from January 2003 to September 2021 to study stock liquidity in the Chinese market. As a novel discovery, this study finds that stock liquidity abnormally decreases with contemporaneous idiosyncratic return and also with 1-year lagged systematic return. Only the idiosyncratic return variance can decrease future short-term or contemporaneous stock liquidity. Idiosyncratic factors are more important than systematic ones for contemporaneous and future stock liquidity. The predictive power of the determinants decreases with the forecast length. Economic policy uncertainty (EPU) can affect sensitivity of stock liquidity to contemporaneous determinants. The empirical results of this research are robust over subperiods, forecast length and across four liquidity measurements. The abnormalities and linkages between determinants and stock liquidity are correlated with investor psychology and special market mechanism in China.

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State ownership and stock liquidity: Evidence from privatization

Cited by 33 publications

References 102 publications

International evidence on state ownership and trade credit: Opportunities and motivations

International evidence on state ownership and trade credit: Opportunities and motivations

The Influence of Government Shareholding on Dividend Policy in Malaysia

Predictive and Contemporaneous Power of the Determinants of Stock Liquidity

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