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Executives' horizon, internal governance and stock market liquidity

Listed author(s):
  • Jain, Pawan
  • Jiang, Christine
  • Mekhaimer, Mohamed
Registered author(s):

    In this article, we examine whether internal governance, the process through which subordinate managers effectively monitor the chief executive officer (CEO), can improve a firm's liquidity. Using the difference in horizons between a CEO and his immediate subordinates to measure internal governance, we show that firms with better internal governance have lower information asymmetry and higher liquidity. Further, we show that internal governance is effective in enhancing liquidity for firms with CEOs close to retirement, firms that require higher firm-specific skills, and firms with experienced subordinate managers. Our results are robust to inclusion of conventional governance measures, alternative model specifications, and different measures of internal governance and liquidity.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0929119916300712
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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 40 (2016)
    Issue (Month): C ()
    Pages: 1-23

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    Handle: RePEc:eee:corfin:v:40:y:2016:i:c:p:1-23
    DOI: 10.1016/j.jcorpfin.2016.06.005
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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