Effects of Large Shareholding on Information Asymmetry and Stock Liquidity

27 Pages Posted: 5 Aug 2004

See all articles by Najah Attig

Najah Attig

Saint Mary's University - Department of Finance & Management Science

Wai Ming Fong

The Chinese University of Hong Kong (CUHK) - Department of Finance

Yoser Gadhoum

University of Quebec at Montreal (UQAM) - Department of Business Strategy

Larry H.P. Lang

The Chinese University of Hong Kong (CUHK) - Department of Finance

Date Written: August 2004

Abstract

Prior studies, such as Claessens, Djankov, Fan and Lang (2002), suggest that separation between ultimate control and ownership decreases firm value (due to the entrenchment effects of large shareholding). Using a sample of Canadian firms, we find that stocks with a greater deviation between ultimate control and ownership have a larger information asymmetry component of their bid-ask spread and a wider quoted bid-ask spread. Our results are consistent with the notion that the ultimate owners of these stocks may have a selfish agenda. To increase the probability of it being implemented, the firm may also have poor information disclosure, resulting in an illiquid stock.

Keywords: Difference between ultimate control and ownership

JEL Classification: G32

Suggested Citation

Attig, Najah and Fong, Wai Ming and Gadhoum, Yoser and Lang, Hsien Ping Larry, Effects of Large Shareholding on Information Asymmetry and Stock Liquidity (August 2004). Available at SSRN: https://ssrn.com/abstract=572761 or http://dx.doi.org/10.2139/ssrn.572761

Najah Attig

Saint Mary's University - Department of Finance & Management Science ( email )

Halifax, Nova Scotia B3H 3C3
Canada
902-491-8679 (Phone)

Wai Ming Fong (Contact Author)

The Chinese University of Hong Kong (CUHK) - Department of Finance ( email )

Shatin, N.T.
Hong Kong

Yoser Gadhoum

University of Quebec at Montreal (UQAM) - Department of Business Strategy ( email )

School of Business Administration
Montreal, Quebec H3C 4R2
Canada
514 987 3000, extension 3107 (Phone)

Hsien Ping Larry Lang

The Chinese University of Hong Kong (CUHK) - Department of Finance ( email )

Shatin, N.T.
Hong Kong
+85 2 2609 7761 (Phone)
+85 2 2603 6586 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
727
rank
33,247
Abstract Views
2,357
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information