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Stock market liquidity and firm value : an empirical examination of the Australian market

Nguyen, Trang, Duong Nhan, Huu and Singh, Harminder 2016, Stock market liquidity and firm value : an empirical examination of the Australian market, International review of finance, Early View, pp. 1-8, doi: 10.1111/irfi.12082.

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Title Stock market liquidity and firm value : an empirical examination of the Australian market
Author(s) Nguyen, Trang
Duong Nhan, Huu
Singh, Harminder
Journal name International review of finance
Season Early View
Start page 1
End page 8
Total pages 8
Publisher Wiley
Place of publication London, Eng.
Publication date 2016
ISSN 1468-2443
Summary We document a positive relation between stock liquidity and firm value. We examine the mechanism through which stock market liquidity enhances firm value by dividing firm value, as measured by Tobin’s Q, into three components, namely, operating income to price, leverage, and operating income to assets. Using the switch to broker anonymity as an exogenous shock to market liquidity, we show that the increase in liquidity around the shock leads to an increase in firm value. Our results suggest that higher firm value for more liquid stocks seems to stem from enhanced stock prices rather than from better operating performance.
Language eng
DOI 10.1111/irfi.12082
Field of Research 1502 Banking, Finance And Investment
150201 Finance
Socio Economic Objective 900101 Finance Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Wiley
Persistent URL http://hdl.handle.net/10536/DRO/DU:30083058

Document type: Journal Article
Collection: Department of Finance
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