Does Corporate Governance Affect Stock Liquidity in the Tunisian Stock Market?

Abstract

Abstract:The aim of the current paper is to study the link between the effects of corporate governance on information asymmetry problems and stock liquidity in the Tunisian Stock Market. We use a sample of 49 Tunisian firms listed between 1998 and 2007. Our results show that corporate governance has direct and indirect effects on stock liquidity. Threat of expropriation exerted by family and foreign shareholders discourages reluctant investors, which decreases stock liquidity. In contrast, they invest their capital in State controlled firms.In fact, State is regarded as an effective controller rather than a shareholder. The State involvement in Tunisian firms is considered as state guarantee for investors, which increases stock liquidity. Our results provide evidence that some attributes of corporate governance improve stock liquidity because they reduce information asymmetry.

Corporate Governance System and Entrepreneurial Orientation in the Banking Sector: Evidence from a Developing Country

“…Corporate governance system (or structure) is set of mechanisms, relationships, rights and responsibilities that are put in place by members of a system for the effective and efficient functioning of the firm and the improvement of shareholders' value. Furthermore, it has been observed that companies with effective corporate governance structures (CGS) attract investors thereby leading to increase in companies' value and decrease in cost of equity (Loukil & Yousfi, 2010 Financial scandals around the world and the recent collapse of major corporate institutions in the USA had brought to the fore , once again, the need for the practice of good corporate governance, which is a system of managing the affairs of corporations with a view to increasing shareholder value and meeting the expectations of the other stakeholders".…”

“…Thus, the long-term success and survival of organizations may be assured when entrepreneurial orientation becomes an organization-wide phenomenon. To this end, several scholars (e.g Dess and Lumpkin, 2005;Naldi, Nordqvist, Sjoberg& Wiklund, 2007) are of the opinion that firms which are highly entrepreneurial in their orientation achieve their goals and objectives efficiently. Aguilera, Filatotchev, Gospel, & Jackson (2008) submitted that Corporate Governance urges managers to be disciplined and committed to shareholders' wealth maximization.…”

Does gender diversity on corporate boards increase risk‐taking?

“…Few studies have been conducted on the issue. Foreign owners reduce CEO power (Ben Cheikh & Loukil, ) and decrease stock liquidity (Loukil & Yousfi, ). SIZE is the measure of the firm size assessed by the book value of assets. GROW is the annual growth rate of assets.…”

“…Despite the fact that more recent studies on emerging markets provide evidence that owner identity is more important than ownership structure (e.g., Dyck, 2001;Loukil & Yousfi, 2013;Omran, Bolbol, & Fatheldin, 2008;Wu, Xu, & Yuan, 2009), empirical studies (see among others Boubakri, Cosset, & Saffar, 2013) have paid little attention to the risk-taking behaviour of owners. From an agency perspective, women are considered independent directors and their appointment to the board may only be decided by the dominant shareholders.…”

“…Few studies have been conducted on the issue. Foreign owners reduce CEO power (Ben Cheikh & Loukil, 2013) and decrease stock liquidity (Loukil & Yousfi, 2013).…”