LIQUIDITY AND FIRM VALUE IN AN EMERGING MARKET

Jonathan Batten and Xuan Vinh Vo

The Singapore Economic Review (SER), 2019, vol. 64, issue 02, 365-376

Abstract: This paper investigates the link between stock market liquidity and firm value in an important emerging market, Vietnam. Specially, we examine this relationship using a sample of firms listed on the Ho Chi Minh City stock exchange for the period 2006–2014. We show that there is a negative relation between liquidity and firm value. This outcome is contrary to previous results for many developed countries. Further, we demonstrate that this result may be explained by differences in leverage effects and pricing-based theories, where stock liquidity influences firm performance via an illiquidity premium or mispricing.

Keywords: Emerging markets; firm value; financial leverage; liquidity; Vietnam (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (13)

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DOI: 10.1142/S0217590817470063

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