IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v2y2014i3p228-252.html
   My bibliography  Save this article

Stock liquidity and capital allocation efficiency: Evidence from Chinese listed companies

Author

Listed:
  • Jiacai Xiong
  • Dongwei Su

Abstract

Based on market microstructure theories and evidence, this paper investigates the relationship between stock liquidity and capital allocation efficiency using Chinese listed companies from 1998 to 2011. This paper finds that stock liquidity helps improve investment efficiency, mitigating both overinvestment and underinvestment. This finding is robust to numerous sensitivity analyses, including controls for endogeneity and for the other known determinants of investment efficiency, the choice of the measure of stock liquidity and investment efficiency. Further analysis shows that stock liquidity improves corporate capital allocation efficiency by reducing agency costs and increasing the information content of share prices.

Suggested Citation

  • Jiacai Xiong & Dongwei Su, 2014. "Stock liquidity and capital allocation efficiency: Evidence from Chinese listed companies," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 2(3), pages 228-252, July.
    • Handle: RePEc:taf:rcjaxx:v:2:y:2014:i:3:p:228-252
    DOI: 10.1080/21697213.2014.959413
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2014.959413
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2014.959413?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. He, Xiqiong & Gu, Xiang & Liu, Hao, 2023. "Stock liquidity and controlling shareholders' encroachment of private interests: Evidence from China," Finance Research Letters, Elsevier, vol. 56(C).
    2. Ma, Guangyuan & Wang, Yihong & Xu, Yekun & Zhang, Limin, 2023. "The breadth of ownership and corporate earnings management," Finance Research Letters, Elsevier, vol. 52(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcjaxx:v:2:y:2014:i:3:p:228-252. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcja .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.