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Firm visibility, liquidity, and valuation for thinly traded assets

Author

Listed:
  • Han, Bing
  • Huang, Xinming
  • Liu, Qi
  • Liu, Yu-Jane

Abstract

We employ a regression discontinuity design to study how a market division experiment affects stock liquidity and firm valuation in an illiquid market. We document that an increase in firm visibility can substantially improve a firm's liquidity (measured by trading immediacy) and increase valuation by 28.4% for thinly traded assets. We also find some evidence that an improved information environment may contribute to enhanced liquidity and valuation.

Suggested Citation

  • Han, Bing & Huang, Xinming & Liu, Qi & Liu, Yu-Jane, 2024. "Firm visibility, liquidity, and valuation for thinly traded assets," Journal of Financial Markets, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finmar:v:70:y:2024:i:c:s1386418124000326
    DOI: 10.1016/j.finmar.2024.100914
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    References listed on IDEAS

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    More about this item

    Keywords

    Thinly traded assets; Firm visibility; Market division; Liquidity; Valuation;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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