Abstract
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.
| Original language | English |
|---|---|
| Pages (from-to) | 44-67 |
| Number of pages | 24 |
| Journal | Journal of Financial Markets |
| Volume | 39 |
| DOIs | |
| Publication status | Published - 1 Jun 2018 |
Keywords
- Foreign competition
- Import tariff
- Information asymmetry
- Stock liquidity
Cite this
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Does exposure to foreign competition affect stock liquidity? Evidence from industry-level import data. / Atawnah, Nader; Balachandran, Balasingham; Duong, Huu Nhan; Podolski, Edward J.
In: Journal of Financial Markets, Vol. 39, 01.06.2018, p. 44-67.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Does exposure to foreign competition affect stock liquidity? Evidence from industry-level import data
AU - Atawnah, Nader
AU - Balachandran, Balasingham
AU - Duong, Huu Nhan
AU - Podolski, Edward J.
PY - 2018/6/1
Y1 - 2018/6/1
N2 - 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.
AB - 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.
KW - Foreign competition
KW - Import tariff
KW - Information asymmetry
KW - Stock liquidity
UR - http://www.scopus.com/inward/record.url?scp=85039773417&partnerID=8YFLogxK
U2 - 10.1016/j.finmar.2017.12.002
DO - 10.1016/j.finmar.2017.12.002
M3 - Article
VL - 39
SP - 44
EP - 67
JO - Journal of Financial Markets
JF - Journal of Financial Markets
SN - 1386-4181
ER -