| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5102217 | The North American Journal of Economics and Finance | 2017 | 12 Pages |
Abstract
In this paper, we examine the role of stock liquidity as a governance mechanism to discipline managers for withholding bad news (stock price crash-risk). This topic is useful to emerging markets because the dominance of controlling owners limits the monitoring of internal governance. Stock liquidity can be altered by the financial market regulations, thereby improving firm-level governance. In empirical analysis, we show that stock liquidity decreases stock price crash-risk. We identify two possible mechanisms through which stock liquidity reduces stock price crash-risk: the threat of intervention and price informativeness.
Related Topics
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Economics and Econometrics
Authors
Yogesh Chauhan, Satish Kumar, Rajesh Pathak,