Market Liquidity and Ambiguity: The Certification Role of Corporate Governance

Emre Kuvvet; Christine X. Jiang; Jang-Chul Kim

doi:10.1111/fire.12051

Market Liquidity and Ambiguity: The Certification Role of Corporate Governance

Emre Kuvvet
, Christine X. Jiang
, Jang-Chul Kim

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

We investigate how firm‐specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance helps reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications and measures of ambiguity, and remain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm‐level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.

Original language	American English
Pages (from-to)	643-668
Number of pages	26
Journal	Financial Review
Volume	49
Issue number	4
DOIs	https://doi.org/10.1111/fire.12051
State	Published - Nov 1 2014

Bibliographical note

Publisher Copyright:
© 2014 The Eastern Finance Association.

ASJC Scopus Subject Areas

Finance
Economics and Econometrics

Keywords

ambiguity
corporate governance
liquidity
spreads
uncertainty
Uncertainty
Corporate governance
G10
Liquidity
G34
Spreads
Ambiguity

Disciplines

Business

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10.1111/fire.12051

Cite this

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title = "Market Liquidity and Ambiguity: The Certification Role of Corporate Governance",

abstract = "We investigate how firm‐specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance helps reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications and measures of ambiguity, and remain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm‐level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.",

keywords = "ambiguity, corporate governance, liquidity, spreads, uncertainty, Uncertainty, Corporate governance, G10, Liquidity, G34, Spreads, Ambiguity",

author = "Emre Kuvvet and Jiang, \{Christine X.\} and Jang-Chul Kim",

note = "Publisher Copyright: {\textcopyright} 2014 The Eastern Finance Association.",

year = "2014",

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doi = "10.1111/fire.12051",

language = "American English",

volume = "49",

pages = "643--668",

journal = "Financial Review",

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AU - Kuvvet, Emre

AU - Jiang, Christine X.

AU - Kim, Jang-Chul

PY - 2014/11/1

Y1 - 2014/11/1

N2 - We investigate how firm‐specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance helps reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications and measures of ambiguity, and remain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm‐level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.

AB - We investigate how firm‐specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance helps reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications and measures of ambiguity, and remain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm‐level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.

KW - ambiguity

KW - corporate governance

KW - liquidity

KW - spreads

KW - uncertainty

KW - Uncertainty

KW - Corporate governance

KW - G10

KW - Liquidity

KW - G34

KW - Spreads

KW - Ambiguity

UR - https://nsuworks.nova.edu/hcbe_facarticles/764

U2 - 10.1111/fire.12051

DO - 10.1111/fire.12051

M3 - Article

SN - 0732-8516

VL - 49

SP - 643

EP - 668

JO - Financial Review

JF - Financial Review

IS - 4

ER -

Market Liquidity and Ambiguity: The Certification Role of Corporate Governance

Abstract

Bibliographical note

ASJC Scopus Subject Areas

Keywords

Disciplines

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