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

Version 2 2024-06-13, 11:19
Version 1 2018-01-15, 14:25
journal contribution
posted on 2024-06-13, 11:19 authored by N Atawnah, B Balachandran, HN Duong, EJ 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

Location

Amsterdam, The Netherlands

ISSN

1386-4181

eISSN

1878-576X

Language

English

Publication classification

C1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2017, Elsevier B.V.

Publisher

ELSEVIER