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Ultimate ownership structure and stock liquidity: empirical evidence from Tunisia

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  • Ghabri Yosra
  • Olfa Ben Ouda Sioud
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    Abstract

    Purpose – The purpose of this paper is to study the ownership-liquidity relation in the context of the Tunisian Stock Exchange. Design/methodology/approach – In particular, the paper examines two empirical relationships: the relationship between ownership concentration and stock liquidity and the relationship between the separation of ownership from control and market liquidity. Findings – The empirical findings verify that the structure of ownership remains concentrated in the majority of the Tunisian firms. It is found that stock liquidity decreases significantly with concentrated ownership. Different devices are used to gain control and hence a significant separation of ownership from control affects liquidity in different ways. The results indicate that pyramidal structures have a significant negative impact on liquidity for all controlled firms. However, for family firms, non-voting shares increase liquidity for minority shareholders by reducing the probability of informed trading. Originality/value – Overall, this study reports that non-voting shares may be a liquidity enhancing device for family firms.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Studies in Economics and Finance.

    Volume (Year): 28 (2011)
    Issue (Month): 4 (October)
    Pages: 282-300

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    Handle: RePEc:eme:sefpps:v:28:y:2011:i:4:p:282-300

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    Related research

    Keywords: Bid-ask spread; Controlling shareholders; Liquidity; Ownership; Pyramidal structure; Tunisia; Voting rights;

    References

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    1. Lawrence R. Glosten & Paul R. Milgrom, 1983. "Bid, Ask and Transaction Prices in a Specialist Market with Heterogeneously Informed Traders," Discussion Papers 570, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Bhide, Amar, 1993. "The hidden costs of stock market liquidity," Journal of Financial Economics, Elsevier, vol. 34(1), pages 31-51, August.
    3. Viral V. Acharya & Lasse Heje Pedersen, 2004. "Asset Pricing with Liquidity Risk," NBER Working Papers 10814, National Bureau of Economic Research, Inc.
    4. La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001. "Investor Protection and Corporate Governance," Working Paper Series rwp01-017, Harvard University, John F. Kennedy School of Government.
    5. Kyle, Albert S, 1985. "Continuous Auctions and Insider Trading," Econometrica, Econometric Society, vol. 53(6), pages 1315-35, November.
    6. Kini, Omesh & Mian, Shehzad, 1995. "Bid-Ask Spread and Ownership Structure," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 18(4), pages 401-14, Winter.
    7. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    8. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
    9. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
    10. Andrei Shleifer & Robert W. Vishny, 1996. "A Survey of Corporate Governance," NBER Working Papers 5554, National Bureau of Economic Research, Inc.
    11. Attig, Najah & Fong, Wai-Ming & Gadhoum, Yoser & Lang, Larry H.P., 2006. "Effects of large shareholding on information asymmetry and stock liquidity," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2875-2892, October.
    12. Marco Becht, 1999. "European corporate governance: trading off liquidity against control," ULB Institutional Repository 2013/13314, ULB -- Universite Libre de Bruxelles.
    13. Heflin, Frank & Shaw, Kenneth W., 2000. "Blockholder Ownership and Market Liquidity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(04), pages 621-633, December.
    14. Holmstrom, Bengt & Tirole, Jean, 1993. "Market Liquidity and Performance Monitoring," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 678-709, August.
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