The Effect of Corporate Governance on Liquidity: Voluntary Disclosure, Analyst Coverage, and Adverse Selection as Mediating Mechanisms

• Main Authors: GOH, Beng Wee, NG, Jeffrey, OW YONG, Kevin
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Corporate governance; voluntary disclosure; analysts; adverse selection; liquidity; Accounting; Business Law, Public Responsibility, and Ethics
• Online Access: https://ink.library.smu.edu.sg/soa_research/20; http://www.mccombs.utexas.edu/dept/finance/fea/a2-voluntary%20disclosure10-17-08.pdf
• Institution: Singapore Management University

Our paper examines how a firm’s corporate governance relates to the liquidity (i.e., bidask spread) of its stock. In particular, we focus on how voluntary disclosure, analyst coverage, and adverse selection among investors mediate this relation. Our results show that better corporate governance, in...