Corporate governance and stock liquidity dimensions: Panel evidence from pure order-driven Australian market
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Liu, Benjamin
Su, Jen Je
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Abstract
Our newly constructed index of corporate governance quality (CGQ) provides comprehensive and robust evidence for the association between CGQ and stock liquidity in the pure order-driven Australia market. By using a large sample of 1207 firms from 2001 to 2013, we find a significant positive relationship between CGQ and stock liquidity, suggesting that better governed firms have greatly improved stock liquidity. Specifically, we find that better governed firms have a lower trading cost, smaller price impacts of trade, and higher trading speed. Moreover, the empirical results reveal that CGQ improves stock liquidity because it is associated with higher information disclosure.
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International Review of Economics and Finance
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© 2017 Elsevier. This is the author-manuscript version of this paper. Reproduced in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
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Economic theory
Applied economics
Applied economics not elsewhere classified
Accounting, auditing and accountability
Banking, finance and investment