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Corporate Governance And Stock Liquidity: Panel Evidence From 2001 To 2013, Searat Ali, Benjamin Liu, Jen Je Su
Corporate Governance And Stock Liquidity: Panel Evidence From 2001 To 2013, Searat Ali, Benjamin Liu, Jen Je Su
Faculty of Business - Papers (Archive)
Constructing a new index of corporate governance quality (CGQ), we provide comprehensive and robust evidence for the association between governance quality and stock liquidity in the pure order-driven stock market of Australia. We hypothesize that governance quality affects stock liquidity because effective governance alleviates information asymmetries between insiders (e.g., managers) and outsiders (e.g., investors), as well as among outsiders by improving the financial transparency of a firm. Consistent with this theoretical argument, by using a large sample of 1,207 firms (10,179 firm-year observations) over the long period from 2001 to 2013, we find a significant positive relationship between governance quality …