The Relation between Intrafirm Distances and Information Opacity: Evidence from Stock Market Liquidity

George D. Cashman, David M. Harrison, Michael Seiler () and Hainan Sheng

Journal of Real Estate Research, 2019, vol. 41, issue 4, 639-668

Abstract: We examine the relation between both intrafirm geographic and cultural distance (i.e., the distance between a firm's headquarters location and its investment properties) on the underlying firm's stock market liquidity. More specifically, using a sample of 166 publicly traded REITs and listed property companies across the Asia-Pacific region over the 2000–2013 period, we find strong evidence that firms with increased levels of intrafirm (geographic) distance exhibit wider bid-ask spreads, while firms with greater intrafirm cultural dispersion enjoy narrower spreads. We conclude that intrafirm distance is fundamentally related to a firm's financial market (informational) opacity and offers both costs and benefits to market participants.

Date: 2019
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DOI: 10.22300/0896-5803.41.4.639

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