Stock market liquidity and firm value☆

Fang, Vivian W.; Noe, Thomas H.; Tice, Sheri

doi:10.1016/j.jfineco.2008.08.007

Cited by 559 publications

(363 citation statements)

References 43 publications

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“…In other words, as liquidity improves, the market places higher values on firms' investments, consistent with Hypothesis 5. Fang et al (2009) use Tobin's Q (calculated as market value of assets divided by book value of assets) as the main measure of firm performance and show a positive relationship between stock market liquidity and Tobin's Q. Since this variable can also be considered a measure of how the market values the book assets, their finding is consistent with my results.…”

Section: Value Added From Market Perceptionsupporting

confidence: 78%

Stock Market Liquidity: Financially Constrained Firms and Share Repurchase

Nguyen

2017

AFR

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Stock liquidity lowers the cost of share ownership to outside investors and decreases firms' cost of capital. This study substantiates that shares of financially constrained firms are significantly less liquid than shares of similar but financially unconstrained firms. Acting as buyers of last resort for their own shares, share repurchases by financially constrained firms enhance stock liquidity, which alleviates the cost of external financing and underinvestment. Increased stock liquidity improves information efficiency, inducing higher added value from incremental capital investments. Further, higher stock liquidity lowers stock volatility and allows financially constrained firms to issue equity.

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Section: Value Added From Market Perceptionsupporting

confidence: 78%

Stock Market Liquidity: Financially Constrained Firms and Share Repurchase

Nguyen

2017

AFR

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“…In a related literature, many papers investigate the impacts of stock market liquidity on different firm decisions. For example, Fang et al (2009) examine the relation between stock liquidity and firm performance. The results of this study show that firms with liquid stocks have better performance as measured by the firm market-to-book ratio.…”

Section: Literature Reviewmentioning

confidence: 99%

Stock Market Liquidity and Firm Investment: Evidence from Vietnam

Ha¹,

Vo²

2017

JIBE

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It is interesting to explore whether corporate managers follow stock market signals when making corporate financial decisions. However, the literature concerning the relationship between stock market liquidity and corporate investment is still limited. This paper investigates the impact of stock liquidity on firm investment in the Vietnamese context, where stock market has grown at a significant pace in the recent years but the finance literature seems to ignore this small emerging economy. This relationship is tested in a panel of firms listed on the Vietnam Stock Market over an extended time period. We aim to achieve more robust estimation results by employing the econometric technique of GMM estimator for panel data analysis. Moreover, we use a number of indicators to proxy for firm investment including both the aggregated indicators and disaggregated indicators. Consistent with previous findings, we find that corporate managers use market liquidity as an input for firm investment decision. However, our results are different from previous findings of papers employing advanced countries data in the outcome that stock market liquidity affects different investment growth indicators differently. More importantly, these findings are fully explainable by the context of emerging markets.

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“…Its risk was the potential loss, because a security can only be traded at high or prohibitive costs. Different stock market researchers have shown different results like Fang et al (2009) found out how the market liquidity influences on firm performance and relation between stock liquidity and firm performance. They assessed the effect of the market liquidity on firm performance as measured by a firm's Tobin's Q ratio.…”

Section: Literature Reviewmentioning

confidence: 99%

Stock market liquidity and firm performance

Singh¹,

Gupta²,

Sharma³

2015

10.5267/j.ac

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This paper investigates the relation between stock liquidity and firm performance. Liquidity plays an important role on performance of firms listed in Stock Exchange. When there is a good flow of trading stocks, people could expect more financing through absorbing investors on the market. This study examines the relationship between stock market liquidity and firm performance. The sample of the study was the continuously NSE listed top ten indices over the period [2005][2006][2007][2008][2009][2010][2011][2012][2013][2014]. To check the relationship between stock market liquidity and firm performance, the ordinary least sequence and general linear models were applied on Gretl and SPSS, respectively. The results of this study showed positive relationship between independent variables, return and age on dependent variable Tobin's Q. Further relationship between stock market liquidity and firm performance was also check and it was found that stock market liquidity was correlated with higher firm performance as measured by Tobin's Q.Growing Science Ltd. All rights reserved. 5

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Stock market liquidity and firm value☆

Cited by 559 publications

References 43 publications

Stock Market Liquidity: Financially Constrained Firms and Share Repurchase

Stock Market Liquidity: Financially Constrained Firms and Share Repurchase

Stock Market Liquidity and Firm Investment: Evidence from Vietnam

Stock market liquidity and firm performance

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