Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Investor Protection, Stock Liquidity, and Firm Value

Author(s): Chuong Hong Pham, Hoang Duc Le, Hung Quoc Dang, Phuong Thu Ta, Chau Minh Nguyen, Uyen Bui Tu

This paper investigates how investor protection affects the relationship between stock liquidity and firm value. Our sample includes 2,297 listed firms in the UK, Germany, France, and Italy from 2009 to 2018. Employing a firm fixed effects model, our results show that stock liquidity exerts a positive impact on firm value. Moreover, we find that this positive impact is strengthened in countries with strong investor protection. These results are robust when we employ a random effects model. Our paper suggests that policy makers should enhance investor protection environment in their countries and recommends firms’ managers to increase the firms’ corporate governance.

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