Executives' horizon, internal governance and stock market liquidity

Pawan Jain, Christine Jiang and Mohamed Mekhaimer

Journal of Corporate Finance, 2016, vol. 40, issue C, 1-23

Abstract: In this article, we examine whether internal governance, the process through which subordinate managers effectively monitor the chief executive officer (CEO), can improve a firm's liquidity. Using the difference in horizons between a CEO and his immediate subordinates to measure internal governance, we show that firms with better internal governance have lower information asymmetry and higher liquidity. Further, we show that internal governance is effective in enhancing liquidity for firms with CEOs close to retirement, firms that require higher firm-specific skills, and firms with experienced subordinate managers. Our results are robust to inclusion of conventional governance measures, alternative model specifications, and different measures of internal governance and liquidity.

Keywords: Executives' horizon; Internal governance; Corporate governance; Subordinate managers; Liquidity (search for similar items in EconPapers)
JEL-codes: G30 G34 G39 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:40:y:2016:i:c:p:1-23

DOI: 10.1016/j.jcorpfin.2016.06.005

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