ABSTRACT
Empirical evidence for the effect of stock liquidity on firm value is limited and mixed due to a severe endogeneity problem. This article adds to the literature on this topic by providing new empirical evidence using the nontradable share reform in China as a quasi-natural experiment. Our results show that higher stock liquidity can lead to significant firm value improvement.
Acknowledgements
Yong Li gratefully acknowledges the financial support by the Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin University of China (Grant number :14XNI005).
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 CSMAR (http://www.gtafe.com) is a data service provider in China aimed at providing stock market, bond market and macro economy data for education.
2 Wind (http://www.wind.com.cn) is a commercial data provider in China, whose database covers all financial sectors in China.
3 RESSET (http://www2.resset.cn/cn/) is another data provider in China for education purpose.