Abstract:
Purpose
To analyze the relationship between corporate governance measures and stock liquidity
by taking 29 manufacturing companies of Pakistan. All the companies which are part of our
research data are listed among KSE 100 index.
Methodology & Design
This research is based on a qualitative approach which involves a set of numeric data
of all the listed 29 manufacturing companies. We find that better-governed firms have a lower
trading cost, smaller price impacts oftrade, and higher trading speed. Moreover, the empirical
results reveal that corporate governance quality improves stock liquidity because it is
associated with higher information disclosure
Findings
After analyzing financial and governance data of 29 listed manufacturing companies
of KSE 100. We find that if companies wanted their stock liquidity better they need to
strengthen their corporate governance aspects. The regression analysis shows that ownership
of financial institutions, foreign shareholders and government ownership in a firm is
significantly associated with the stock liquidity. Whereas, board size and board independence
not significantly related to stock liquidity.
Limitations
are
Due to data limitation and measures ofCG available in firm’s report we restricted with
representative sample of PSX using KSE 100 index manufacturing firms only. This limitation
is while collecting data set of Pakistani companies we face is many companies did not update
their data correctly there are variations noticed in many websites and some ofthe companies
hide their financial data which cause many problems in the way ofresearch and also this data
is large. Also, the time ofthe study is from 2016 till 2020.
Recommendations
For improving all the aspects of financial data in all companies it is recommended to
structure and improve their decision-making them to work on their corporate governance
power to reduce the financial loss.
