Does Corporate Governance Affect Stock Liquidity in the Tunisian Stock Market?

34 Pages Posted: 5 Nov 2012

See all articles by Nadia Loukil

Nadia Loukil


Ouidad Yousfi

Université de Montpellier

Date Written: June 6, 2012


The aim of the current paper is to study the link between corporate governance and stock liquidity. We analyze first the effects of corporate governance on asymmetric information in stock market, and then we see whether these effects improve or decrease stock liquidity. We consider a sample of 49 Tunisian firms listed between 1998 and 2007. Our results show that corporate governance has direct and indirect effects on stock liquidity. Threat of expropriation with family and foreign shareholders discourages reluctant investors, which decreases stock liquidity. In contrast, they invest their capital in State controlled firms. In fact, State is regarded as an effective controller rather than a shareholder. The State involvement in Tunisian firms is considered as state guarantee for investors, which increases stock liquidity. Our results provide evidence that some attributes of corporate governance improve stock liquidity because they reduce information asymmetry.

Keywords: orporate governance, shareholder identity, stock liquidity, Tunisian Stock Exchange

JEL Classification: G10, G34

Suggested Citation

Loukil, Nadia and Yousfi, Ouidad, Does Corporate Governance Affect Stock Liquidity in the Tunisian Stock Market? (June 6, 2012). 29th International Conference of the French Finance Association (AFFI) 2012. Available at SSRN: or

Nadia Loukil

FIESTA - ISG Tunis ( email )

ISG Tunis Rue de la Cité

Ouidad Yousfi (Contact Author)

Université de Montpellier ( email )

Place Eugène Bataillon
Montpellier, 34095

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