Does corporate governance affect stock liquidity in the Tunisian Stock Market?

Nadia Loukil and Ouidad Yousfi ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of the current paper is to study the link between the effects of corporate governance on information asymmetry problems and stock liquidity in the Tunisian Stock Market. We use a sample of 49 Tunisian firms listed between 1998 and 2007. Our results show that corporate governance has direct and indirect effects on stock liquidity. Threat of expropriation exerted by family and foreign shareholders discourages reluctant investors,which decreases stock liquidity. In contrast, they invest their capital in State controlled firms. In fact, State is regarded as an effective controller rather than a shareholder. The State involvement in Tunisian firms is considered as state guarantee for investors, which increases stock liquidity. Our results provide evidence that some attributes of corporate governance improve stock liquidity because they reduce information asymmetry.

Keywords: corporate governance; shareholder identity; stock liquidity; Tunisian Stock Exchange (search for similar items in EconPapers)
JEL-codes: G10 G34 (search for similar items in EconPapers)
Date: 2010-01, Revised 2011-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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