Board Interlocks and Stock Liquidity: New Evidence from an Emerging Market

44 Pages Posted: 4 Feb 2021

See all articles by William Mbanyele

William Mbanyele

Center for Economic Research, Shandong University

Fengrong Wang

Center for Economic Reseach, Shandong University

Date Written: December 18, 2021

Abstract

This study examines the implications of board interlocks on stock liquidity using a sample of listed Brazilian firms. The instrumental variable two-stage least squares estimation is used to minimize endogeneity concerns. This study provides evidence that board interlocks are positively related to stock liquidity. Our cross-sectional study findings reveal that the impact of board interlocks on stock liquidity is more pronounced for firms with high uncertainty, in competitive industries, and with poor governance. Our findings suggest that board interlocks aid businesses in accessing external capital from potential investors.

Keywords: Board interlocks, Brazil, information asymmetry, signaling theory, stock liquidity

JEL Classification: D85, G10, G14, L14

Suggested Citation

Mbanyele, William and Wang, Fengrong, Board Interlocks and Stock Liquidity: New Evidence from an Emerging Market (December 18, 2021). Emerging Markets Finance and Trade, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3775283 or http://dx.doi.org/10.2139/ssrn.3775283

William Mbanyele (Contact Author)

Center for Economic Research, Shandong University ( email )

Jinan, SD Shandong 250100
China

Fengrong Wang

Center for Economic Reseach, Shandong University ( email )

SHANDONG UNIVERSITY
27 SHANDA SOUTH ROAD
JINAN, SD 250100
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
13
Abstract Views
71
PlumX Metrics