Stock Liquidity and Investment Efficiency

2017-05-17T02:12:42Z (GMT) by HEIDI HOOI KHUAN QUAH
This PhD study investigates the implications of stock liquidity on firm investments efficiency. The study finds that high stock liquidity has a positive impact on investment efficiency and shows that the beneficial effect of stock liquidity on investment efficiency is stronger among firms with higher information asymmetry and higher monitoring institutional investors. These findings suggest that high stock liquidity plays important informational and governance roles in mitigating information asymmetry and agency problems that may inhibit investment efficiency. The findings offer market participants with greater insight on how stock liquidity affects firm performance.