 Corporate Governance and Equity Liquidity: analysis of S&P transparency and disclosure rankingsWei‐Peng Chen, Huimin Chung, Chengfew Lee and Wei‐Li Liao Corporate Governance: An International Review, 2007, vol. 15, issue 4, 644-660 Abstract: This paper sets out to investigate the effects of disclosure, and other corporate governance mechanisms, on equity liquidity, arguing that those companies adopting poor information transparency and disclosure practices will experience serious information asymmetry. Since poor corporate governance leads to greater information asymmetry, liquidity providers will incur relatively higher adverse information risks and will therefore offer higher information asymmetry components in their effective bid‐ask spreads. The Transparency and Disclosure (T&D) rankings of the individual stocks on the S&P 500 index are employed to examine whether firms with greater T&D rankings have lower information asymmetry components and lower stock spreads. Our results reveal that the economic costs of equity liquidity, i.e. the effective spread and the quoted half‐spread, are greater for those companies with poor information transparency and disclosure practices. Date: 2007 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:corgov:v:15:y:2007:i:4:p:644-660 Ordering information: This journal article can be ordered from Access Statistics for this article Corporate Governance: An International Review is currently edited by William Judge More articles in Corporate Governance: An International Review from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.