Investors’ Rights Protection and Firm Liquidity: Evidences from Hong Kong

Posted: 24 Aug 2009

See all articles by Xiaofeng Shi

Xiaofeng Shi

Monash University - Department of Accounting

Michael J. Dempsey

Ton Duc Thang University (TDTU)

Huu Nhan Duong

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Petko S. Kalev

La Trobe Business School

Date Written: August 24, 2009

Abstract

We examine empirically the relation between stock liquidity and investor rights protection in the context of Hong Kong stock markets. We find that levels of investor protection at both the protective environment level and firm level are positively correlated with stock liquidity, as measured by the bid-ask spreads and market depth, and trading volume. We also find that the investor protection - liquidity relation is more significant at the firm level than at the protective environment level. We conclude that firm level protections dominate legal environment protections.

Keywords: Corporate Governance, Investors’ rights protection, liquidity

JEL Classification: G10, G20, G24

Suggested Citation

Shi, Xiaofeng and Dempsey, Michael J. and Duong, Huu Nhan and Kalev, Petko S., Investors’ Rights Protection and Firm Liquidity: Evidences from Hong Kong (August 24, 2009). 22nd Australasian Finance and Banking Conference 2009, Available at SSRN: https://ssrn.com/abstract=1460673 or http://dx.doi.org/10.2139/ssrn.1460673

Xiaofeng Shi

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia

Michael J. Dempsey

Ton Duc Thang University (TDTU) ( email )

District 7
Ho Chi Minh City, 3001
Vietnam

Huu Nhan Duong

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Petko S. Kalev (Contact Author)

La Trobe Business School ( email )

Department of Economics and Finance
Donald Whitehead Building: Level 3, DWB313
Bundoora, Victoria 3086
Australia
+613 9479 6285 (Phone)
+613 9479 1654 (Fax)

HOME PAGE: http://www.latrobe.edu.au/business/about/staff/profile?uname=PKalev

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