The impact of board of directors’ quality on stock’s liquidity: Evidence from Thailand Stock Market
Post by MSF Chula at Sunday, 10 January 2021 05:59 PM

This study empirically examines the impact of board of directors’ quality on stock’s liquidity: Evidence from the Thailand Stock Market. The board of directors plays an important role to contribute to the firm’s corporate governance and the theory says good corporate governance can help film reduce its adverse selection problem that can lead to having higher liquidity. However, based on our empirical experiment that contains all stocks in the SET index during 2006-2015, we found the negative relationship between the board of directors’ quality and stock’s liquidity. The results are still robust even after controlling a firm’s characteristics. We also show that our results are not caused by endogeneity.

Our criteria for determining board of directors’ quality is mostly voluntary guideline from IOD and ISS that is not enforced by law, on the other hand, the previous literature mostly used criteria that also enforce by law. Thus our results show different aspects that too much restriction on board of directors especially the criteria that is voluntary guideline basis can lead to lower liquidity that is the same concept with the relationship of corporate governance and company performance.

Last updated at Sunday, 10 January 2021 05:59 PM