Government ownership and stock liquidity: Evidence from China

Mingfa Ding and Sandy Suardi

Emerging Markets Review, 2019, vol. 40, issue C, -

Abstract: This paper documents that state ownership is associated with higher stock liquidity, a finding consistent with lower investor risk perception of firms that benefit from state ownership, like preferential financing and implicit government guarantees. The effect is found to be stronger when government ownership confers stronger benefits like firms with state controlling rather than non-controlling shareholders, and when the benefits of government ownership are important – for smaller firms, for financially constrained firms, and especially during the financial crisis period. These results suggest that investors perceive government ownership as value-enhancing, which increases their willingness to trade in such stocks.

Keywords: State controlling shareholder; Stock liquidity; Information asymmetries; Trading activity (search for similar items in EconPapers)
JEL-codes: C23 G12 G18 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:40:y:2019:i:c:7

DOI: 10.1016/j.ememar.2019.100625

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