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Institutional ownership and commonality in liquidity

Thi Thuy Anh Vo (), Tung Dang (), Man Dang () and Viet Anh Hoang

Research in International Business and Finance, 2021, vol. 57, issue C

Abstract: We investigate the relation between institutional ownership and commonality in liquidity and whether this relation differs across country-level institutional and information environments. Using a comprehensive dataset for firms across 40 countries for the period between 2000 and 2016, we find that institutional ownership is negatively associated with stock liquidity commonality. In addition, a firm’s information environment plays the moderating role in the relation between institutional ownership and commonality in stock liquidity. Importantly, we document that the negative association between institutional ownership and liquidity commonality is stronger for firms in countries with weak institutional characteristics or less transparent information environments. Our findings provide additional insights into the role of institutional investors as a demand-side factor of liquidity commonality in international financial markets.

Keywords: Institutional ownership; Liquidity commonality; Corporate governance; Firm transparency; Institutional characteristics (search for similar items in EconPapers)
JEL-codes: G14 G15 G23 G38 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:57:y:2021:i:c:s027553192100043x

DOI: 10.1016/j.ribaf.2021.101422

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