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Does brand capital improve stock liquidity? Evidence from China

Author

Listed:
  • Muhammad Ansar Majeed

    (ZJSU - Zhejiang Gongshang University [Hangzhou])

  • Irfan Ullah

    (Jiangxi Normal University)

  • Samia Tariq
  • Tanveer Ahsan

    (ESC [Rennes] - ESC Rennes School of Business)

Abstract

This study investigates how brand capital affects stock market liquidity. We posit that brand capital improves the corporate information environment, enhances competitiveness, and increases firm visibility ultimately resulting in higher stock liquidity. Using a sample of Chinese listed firms, we find a positive relationship between brand capital and stock liquidity. Further analyses show that the effect of brand capital is more pronounced for firms with low media coverage and analyst following. Moreover, the effect of brand capital on stock liquidity is significant for non‐state‐owned enterprises. Our mechanism analyses also confirm that brand capital plays an informational role by effectively mitigating information asymmetry and adverse selection, leading to higher stock liquidity. Our study provides the first evidence of the nexus between brand capital and stock liquidity and extends the literature on the capital market implications of brand capital.

Suggested Citation

  • Muhammad Ansar Majeed & Irfan Ullah & Samia Tariq & Tanveer Ahsan, 2023. "Does brand capital improve stock liquidity? Evidence from China," Post-Print hal-04636924, HAL.
    • Handle: RePEc:hal:journl:hal-04636924
    DOI: 10.1002/ijfe.2918
    as

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