The Impact of Ownership Structure on Stock Liquidity: Evidence from Amman Stock Exchange

Faten Al- Sharif, Adel Bino, Mohammad Tayeh

Abstract


This paper investigates the relationship between firm’s ownership structure and its stock liquidity for firms listed on Amman Stock Exchange. We find that most of the firms have highly concentrated ownership structure. The largest shareholder of most of the publicly traded corporation is either a family or a private firm. The results show that stock liquidity of firms whose “largest shareholder” is a family which is very low compared to those of widely held firms. Regression results show that the percentage of ownership and the existence of one or more “large shareholders” significantly explain the cross-sectional variation in illiquidity ratio and turnover ratio. The coefficients of the percentage of ownership and the existence of largest shareholder are positively (negatively) related to illiquidity ratio (turnover ratio).
JEL classification: G10; G32; G34

Keywords


Ownership structure; Largest owner; Stock liquidity; Illiquidity ratio; Turnover ratio

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