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The impact of ownership concentration and analyst coverage on market liquidity: Comparative evidence from an auction and a specialist market

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  • Raffaele Staglianò

    (MRM - Montpellier Research in Management - UM - Université de Montpellier - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM1 - Université Montpellier 1 - UPVD - Université de Perpignan Via Domitia - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVM - Université Paul-Valéry - Montpellier 3)

  • Maurizio La Rocca

    (Unical - Università della Calabria [Arcavacata di Rende])

  • Dionigi Gerace

    (University of Wollongong)

Abstract

This paper examines the relationships among market liquidity, ownership structure and public information production in Italy, where the share market setting might have a considerable effect. Our findings suggest that both the private information held by the largest blockholder and the public information provided by financial analysts have an impact on market liquidity. The percentage of shares owned by the controlling shareholder harms market liquidity, whereas analyst coverage improves it. The study demonstrates that the results differ with the stock market setting. We find that the effects of these two key variables are significantly lower in a specialist market than in a non-specialist market. These results emphasize the importance of distinguishing between auction and specialist market structures when studying the impact of corporate governance and analyst coverage on market liquidity. Notably, the study demonstrates that the sign and the intensity of the effect of analyst coverage on market liquidity changes according to the varying levels of ownership concentration, suggesting that private information and public information may act as complements.

Suggested Citation

  • Raffaele Staglianò & Maurizio La Rocca & Dionigi Gerace, 2018. "The impact of ownership concentration and analyst coverage on market liquidity: Comparative evidence from an auction and a specialist market," Post-Print hal-02091757, HAL.
  • Handle: RePEc:hal:journl:hal-02091757
    DOI: 10.1016/j.econmod.2017.11.004
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-02091757
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    1. He, Feng & Ma, Yaming, 2019. "Do political connections decrease the accuracy of stock analysts' recommendations in the Chinese stock market?," Economic Modelling, Elsevier, vol. 81(C), pages 59-72.

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    More about this item

    Keywords

    Market liquidity; Ownership concentration; Analyst coverage; Bid-ask spread;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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