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Stock Liquidity and Corporate Social Responsibility
Xin (Simba) Chang1; Weiqiang Tan2; Endong Yang3; Wenrui Zhang4
2019
Conference Name31st Australasian Finance and Banking Conference 2018
Source Publicationproceedings of 31st Australasian Finance and Banking Conference 2018
Conference DateDecember 13-15, 2018
Conference PlaceSydney NSW 2052 , Australia
Abstract

We show that stock liquidity negatively affects firms’ corporate social responsibility (CSR) ratings. To identify the causal effect, we use the decimalization of stock trading as an exogenous shock to liquidity. The negative CSR effect of liquidity is more pronounced for firms where short-term institutional ownership is higher, CEOs’ wealth is more sensitive to firm value, CEOs approach the retirement age, analyst coverage is higher, or there are more covenants on firms’ bank debt. These findings suggest that high stock liquidity increases short-termism pressure and discourages firms from engaging in CSR activities, which are long-term in nature. Overall, our analysis reveals the potential disincentives created by stock liquidity in aligning the interest of shareholders and other stakeholders.

KeywordStock Liquidity Short-termism Corporate Social Responsibility (Csr) Investor Horizon
Language英语
Fulltext Access
Document TypeConference paper
CollectionFaculty of Business Administration
DEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Affiliation1.Nanyang Business School, Nanyang Technological University
2.Hong Kong Baptist University
3.University of Macau
4.The Chinese University of Hong Kong (CUHK) - Department of Finance
Recommended Citation
GB/T 7714
Xin ,Weiqiang Tan,Endong Yang,et al. Stock Liquidity and Corporate Social Responsibility[C],2019.
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