Ownership Structure, Liquidity, and Firm Value: Effects of the Investment Horizon

35 Pages Posted: 18 Aug 2009 Last revised: 18 Aug 2011

See all articles by Jun Uno

Jun Uno

Waseda University

Naoki Kamiyama

Nikko Asset Management Co., Ltd.; affiliation not provided to SSRN

Date Written: November 1, 2009

Abstract

A firm’s ownership structure influences both its liquidity and value. This paper introduces a new measure of latent investment horizon, a weighted average investment horizon computed from the firm’s ownership structure and the average investment horizon of various investor categories. We find that the latent investment horizon explains differences in liquidity and firm value among firms listed on the Tokyo Stock Exchange. Empirical results indicate that the longer the investment horizon, the lower the firm’s liquidity and value. In addition, concentrated ownerships by foreign (cross-holding) shareholders can lead to superior (inferior) liquidity and corporate governance after accounting for selection bias.

Keywords: ownership structure, liquidity, monitoring, corporate governance, market microstructure

JEL Classification: G1, G32

Suggested Citation

Uno, Jun and Kamiyama, Naoki, Ownership Structure, Liquidity, and Firm Value: Effects of the Investment Horizon (November 1, 2009). 22nd Australasian Finance and Banking Conference 2009. Available at SSRN: https://ssrn.com/abstract=1455995 or http://dx.doi.org/10.2139/ssrn.1455995

Jun Uno (Contact Author)

Waseda University ( email )

1-6-1 Nishi-Waseda
Shinjuku-ku
Tokyo, 1698050
Japan

Naoki Kamiyama

Nikko Asset Management Co., Ltd. ( email )

Midtown Tower
9-7-1 Akasaka
Minato-ku, Tokyo 107-6242
Japan

affiliation not provided to SSRN

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