Publication: The effect of corporate governance on stock liquidity: The case of Thailand
Issued Date
2014-01-01
Resource Type
ISSN
10590560
Other identifier(s)
2-s2.0-84897574631
Rights
Mahidol University
Rights Holder(s)
SCOPUS
Bibliographic Citation
International Review of Economics and Finance. Vol.32, (2014), 132-142
Suggested Citation
Panu Prommin, Seksak Jumreornvong, Pornsit Jiraporn The effect of corporate governance on stock liquidity: The case of Thailand. International Review of Economics and Finance. Vol.32, (2014), 132-142. doi:10.1016/j.iref.2014.01.011 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/33807
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Title
The effect of corporate governance on stock liquidity: The case of Thailand
Author(s)
Abstract
Grounded in agency theory, this study explores the effect of corporate governance on equity liquidity in Thailand. Theory suggests that effective governance enhances financial and operational transparency, which in turn, reduces adverse selection. Facing less adverse selection problems, traders provide more liquidity to stocks of well-governed firms. Based on a sample of largest firms in Thailand from 2006 to 2009, our results show a significant relationship between governance and liquidity within firms over time. In particular, within firms, when governance quality increases, liquidity significantly improves. For instance, a rise in governance quality by one standard deviation improves the liquidity ratio by 26.19%. We also show that our results are unlikely confounded by endogeneity. © 2014 Elsevier Inc.