The hidden costs of stock market liquidity

Article Abstract:

A study of the United States stock market suggests that liquidity is costly in terms of hindering corporate governance and internal monitoring. There is a lack of incentives to encourage internal monitoring, leading to a problem in governance, and possibly too much emphasis on external monitoring. Active shareholders are more likely to be involved in a company's management, but policies to boost active shareholding are likely to reduce the liquidity of stock markets and increase risks run by small investors.

Management consulting services, Finance, Stock-exchange, Stock exchanges

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A revealed preference approach to understanding corporate governance problems: evidence from Canada

Article Abstract:

Corporate governance problems are attributed to the divergent incentives and asymmetric information between owners and executives. The difference discount rates that are used by shareholders and corporate executives are examined. A revealed preference method is proposed to examine corporate governance problems that have an effect on the effective discount rates that guides the executives in making their investment decisions. The results indicate the degree of governance problems that distort firm behavior.

Canada, Investments, Investment management

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Corporate governance and firm value: evidence from the Korean financial crisis

Article Abstract:

The importance of corporate governance measures in determining firm value during a crisis is examined. It was found that the differences in the valuation effects between chaebol and non-chaebol firms in Korea largely attribute to the distorted incentives of chaebol owner-managers.

South Korea, Economic aspects, Korea, Financial crises

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