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Financial statement comparability and stock liquidity: evidence from China

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  • Muhammad Ansar Majeed
  • Chao Yan

Abstract

This study examines the effect of financial statement comparability on stock liquidity. Drawing from information asymmetry arguments, we posit that greater comparability increases financial transparency, which improves the information environment and increases stock liquidity. Our results show a positive relationship between comparability and stock liquidity. However, the effect of comparability on stock liquidity is only significant for non state-owned enterprises. Additionally, institutional ownership strengthens the impact of comparability on stock liquidity. Our findings suggest a more pronounced comparability effect on stock liquidity for firms with greater information opacity. Overall, our study indicates that higher comparability decreases information asymmetry and facilitates investors’ decision-making.

Suggested Citation

  • Muhammad Ansar Majeed & Chao Yan, 2022. "Financial statement comparability and stock liquidity: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 54(47), pages 5497-5514, October.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:47:p:5497-5514
    DOI: 10.1080/00036846.2022.2047597
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    Cited by:

    1. Ding Ning & Irfan-Ullah & Muhammad Ansar Majeed & Aurang Zeb, 2022. "Board diversity and financial statement comparability: evidence from China," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 743-801, December.
    2. Dachen Sheng & Heather A. Montgomery, 2024. "Assessing Mutual Fund Performance in China: A Sector Weight-Based Approach," Mathematics, MDPI, vol. 12(16), pages 1-21, August.

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