An Investigation Of The Relation Between Corporate Governance And Liquidity: Empirical Evidence From France
Year: 2015
Type: article
Abstract: This study investigates the impact of corporate governance effectiveness on the market stock liquidity. It is innovative, since we study, on an order driven market, the global effect of corporate governance and the effect of specific governance sub-indexes. Drawing on a sample of 287 French firms from 2007 to 2012, we find that corporate governance is a significant determinant of stock liquidity. Indeed, companies with an effective corporate governance have a narrower spreads. Thats mean that corporate governance may alleviate information asymmetry and improve the market stock liquidity of French companies. Our results are remarkably robust to other set of measures of liquidity as the effective spread measure and illiquidity ratio. These results suggest that firms may improve stock market liquidity by adopting best practices of corporate governance that mitigate informational asymmetries.
Authors: Majdi Karmani, Aymen Ajina, Rym Boussaada
Institutions: University of Liège, Excelia Business School
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W1594615352