Bid-Ask Spread, Asymmetric Information and Ultimate Ownership
EFMA 2003 Helsinki
32 Pages Posted: 10 Oct 2002
We collect the ultimate ownership data for the 1,167 Canadian traded corporations, for the 1994-1996 period, to examine the relationship between stock liquidity and ultimate ownership structure. Our results suggest that the presence of family increases the bid-ask spread. In addition, the magnitude of the deviation between ultimate ownership and ultimate control at the presence of families is important in determining the bid-ask spread. Furthermore, we document that mechanisms of enhancing control, say pyramid at the presence of families, significantly affect bid-ask spreads.
Keywords: Market liquidity, ultimate ownership, divergence of cash flow right and control right
JEL Classification: G32
Suggested Citation: Suggested Citation