Market Stock Liquidity and Corporate Governance

20 Pages Posted: 5 Nov 2012

See all articles by Majdi Karmani

Majdi Karmani

Groupe Sup de Co La Rochelle, IRGO

Aymen Ajina

University of Liege - HEC Management School

Date Written: June 6, 2012

Abstract

In this paper, we investigate the empirical relation between corporate governance and stock market liquidity of the French firms. Based on a cross-sectional analysis, our study of the empirical relation between the corporate governance and the stock liquidity was realized on 155 French companies during 2008 and 2009. The handled mechanisms include the characteristics of the board of directors and the audit committee.

Our results seem to indicate a significant effect of certain mechanisms of corporate governance on the liquidity of the French market. These mechanisms can reduce the asymmetry of information between the investors, make the exchanges more transparent and provoke an improvement of the liquidity on the market. These results suggest that firms with better corporate governance may reduce the informative asymmetry and improve the liquidity of its stocks.

Keywords: French stock market, corporate governance, market liquidity

Suggested Citation

Karmani, Majdi and Ajina, Aymen, Market Stock Liquidity and Corporate Governance (June 6, 2012). 29th International Conference of the French Finance Association (AFFI) 2012. Available at SSRN: https://ssrn.com/abstract=2084707 or http://dx.doi.org/10.2139/ssrn.2084707

Majdi Karmani (Contact Author)

Groupe Sup de Co La Rochelle, IRGO ( email )

102 rue de Coureilles
La Rochelle, 17000
France

Aymen Ajina

University of Liege - HEC Management School ( email )

Boulevard du Rectorat 7 (B31)
LIEGE, Liege 4000
Belgium

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