Abstract
Corporate governance plays a significant role in the value of shareholders and share prices, hence stock market liquidity is affected. Previous research has mainly focused on the issue in developed markets, whereas in developing countries there is a need to analyze the influence of corporate governance on stock market liquidity. Therefore, the present study aims to examine the impact of ownership structure and board characteristics on stock market liquidity of non-financial firms of South Asian countries such as Pakistan, Sri Lanka, Bangladesh, and India. The data in the study is collected from the DataStream for the 2011–2020 period. The study uses a fixed effect model for the analysis of the data and hypotheses testing and generalized method of moments (GMM) is used to check the robustness of the results. The findings of the study indicate that institutional ownership, board size, board independence, and CEO duality have a significant and positive impact on stock market liquidity, whereas managerial ownership has a significant and negative effect on stock market liquidity.
Highlights
Keeping in view the importance of corporate governance and its influence in shaping the value of shareholders and share prices mainly in South Asian countries, our study aims to investigate the relationship between ownership structure, board characteristics, and stock market liquidity in South Asia
This study finds that institutional ownership, board size, and board independence have significant and positive effects on stock market liquidity, whereas managerial ownership significantly and negatively affects stock market liquidity
This study investigates the effects of ownership structure and board characteristics on stock market liquidity
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Corporate governance issues are not new; rather they emerge with the introduction of a corporation. The need for recognition, introduction, and implementation of corporate governance mechanisms gathers the attention and interest of the whole corporate world, due to these cases. Due to the Asian financial crises in the twenty-first century, this issue gathers attention and interest in Asian countries. Corporate governance is a system which assures the fund providers that they will gain reasonable return on their investments (Shleifer and Vishny 1997). Brennan and Solomon (2008) describe corporate governance as a strategy that confirms that management is handling the firm’s operations in a way that helps to protect stakeholders’ interest.
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