The mediating role of common stock's liquidity between ownership structure characteristics and corporation's value: Evidence from emerging markets

Abstract

The study investigated the mediating role of common stock liquidity between ownership structure characteristics and a corporation's value in emerging markets. A quantitative approach was adopted for seventy non-financial listed corporations from seven markets, including Brazil, Egypt, India, Russia, Saudi Arabia, South Africa, and Turkey. The data was collected annually from 2012 to 2021. After removing the outliers using winnowing at 1% and testing the stationary data, the study discovered that ownership structure characteristics and Common Stock’s Liquidity, under the control variables, determine the corporation's value in emerging markets by 69.35% according to panel data analysis but by 69.1% according to hierarchical regression analysis. Finally, the study found that Common Stock Liquidity played a significant mediating role, resulting in an average increase of 47.7% in interpreting the change in the value of the corporation in emerging markets. Therefore, common stock liquidity has a significant impact on the value of a corporation and should not be overlooked by top management and investors when making investment decisions in the stock exchange. Thus, common stock liquidity is one of the factors that create value for shareholders in emerging markets.