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Corporate Investment And Stock Liquidity: Evidence On The Price Impact Of Trade, Moonsoo Kang, Wei Wang, Chanyoung Eom
Corporate Investment And Stock Liquidity: Evidence On The Price Impact Of Trade, Moonsoo Kang, Wei Wang, Chanyoung Eom
Business Faculty Publications
We document that corporate investment contributes to stock liquidity. This study demonstrates a positive relationship between abnormal corporate investment and stock liquidity in the cross-section.Moreover, stock liquidity
improves more apparently for firms with financial constraints. Our robustness check confirms that the
existing regularities cannot explain the current finding. This analysis suggests that corporate investment decreases
the risk of a firm and that a change in the risk affects the behavior of a market maker, leading to an increase
in stock liquidity.