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Does exposure to foreign competition affect stock liquidity? Evidence from industry-level import data

journal contribution
posted on 01.06.2018, 00:00 authored by N Atawnah, B Balachandran, H N Duong, Edward PodolskiEdward Podolski
We document a negative association between foreign competition and stock liquidity. Our results are robust to addressing endogeneity concerns. We identify deterioration in the information environment in response to an increase in foreign competition as the channel behind the main result. Specifically, we find that the negative association is more evident among firms that are more susceptible to the negative consequences of foreign competition and firms that are poorly monitored and have lower analyst coverage. Our paper contributes to the understanding of the externalities of trade liberalization for financial market quality.

History

Journal

Journal of financial markets

Volume

39

Pagination

44 - 67

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

1386-4181

Language

eng

Publication classification

C1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2017, Elsevier B.V.