The effects of stock liquidity on firm value and corporate governance: Endogeneity and the REIT experiment
By William M. Cheung, Richard Chung, Scott Fung. 2015
116 citations recorded by the source corpus.
This study examines the effects of stock liquidity on firm value and corporate governance using the Real Estate Investment Trust (REIT) setting. The unique features of the REIT industry, including homogeneity of the investment structures, the high payout requirement, and the importance of institutional investors, highlight the positive effect of stock liquidity on firm value through corporate governance. To address the endogeneity problem, we perform a difference-in-differences test based on the propensity score matching estimator. The result shows that REIT stock liquidity has a causal and positive effect on firm value, as measured by Tobin's Q. Importantly, REIT stock liquidity is conducive to better corporate governance through the channel of institutional ownership. REIT stock liquidity leads to higher institutional ownership, particularly for institutional investor types that are active monitors and institutional investors with multi-firm ownership in their REIT portfolios.
Subfields: Accounting, Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/52bb18a37f7e4cb6c6f841ce0682b357a14e38c1
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Citations in the corpus
- Profitability and liquidity on firm value and capital structure as intervening variable (2020, background): “The research results of Cheung et al. (2015) and Tahu & Susilo (2017), explain that liquidity has a positive effect on firm value which is proxied by Yanti & Dwirandra (2019), analysis in his”