Market Liquidity and Ambiguity: The Certification Role of Corporate Governance

Author(s)

Emre Kuvvet, Nova Southeastern UniversityFollow
Christine X. Jiang
Jang-Chul Kim

Document Type

Article

Publication Title

Financial Review

ISSN

0732-8516

Publication Date

2014

Abstract/Excerpt

We investigate how firm‐specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance helps reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications and measures of ambiguity, and remain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm‐level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.

DOI

10.1111/fire.12051

Volume

49

Issue

4

First Page

643

Last Page

668

NSUWorks Citation

Kuvvet, Emre; Jiang, Christine X.; and Kim, Jang-Chul, "Market Liquidity and Ambiguity: The Certification Role of Corporate Governance" (2014). HCBE Faculty Articles. 764.
https://nsuworks.nova.edu/hcbe_facarticles/764