Insider ownership, bid-ask spread, and stock splits: Evidence from the Stock Exchange of Thailand

This paper examines the moderating effect of insider ownership on bid-ask spread changes during stock splits in Thailand, an economy with highly concentrated ownership structures. Consistent with the liquidity hypothesis, the overall finding shows that bid-ask spread declines significantly after stock splits. The results also indicate that there is a significant relation between insider ownership and the change in bid-ask spread. Specifically, significant reductions in bid-ask spread occurred mostly among firms with low levels of insider ownership before stock splits. Bid-ask spreads remain virtually unchanged for shares with high ownership concentration. The findings highlight the link between corporate governance structure, market microstructure, and corporate financial decisions in emerging markets.