The mediating role of common stock's liquidity between ownership structure characteristics and corporation's value: Evidence from emerging markets

Osama  Wagdi; Mohamed  Farouk; Shereen Aly Hussien Aly  Abdou

doi:10.33094/ijaefa.v16i2.980

Authors

Osama Wagdi Department of Business Administration, Faculty of Management, Economics and Business Technology, Egyptian Russian University, Egypt. https://orcid.org/0000-0003-0451-9726
Mohamed Farouk Department of Accounting, Faculty of Management, Economics and Business Technology, Egyptian Russian University, Egypt. https://orcid.org/0000-0002-7015-6444
Shereen Aly Hussien Aly Abdou Department of Business Administration, Faculty of Commerce and Business Administration, Helwan University, Egypt. https://orcid.org/0000-0002-7480-5456

DOI:

https://doi.org/10.33094/ijaefa.v16i2.980

Keywords:

Common stock’s liquidity, Corporation's value, Equity liquidity, Ownership structure.

Abstract

The study investigated the mediating role of common stock liquidity between ownership structure characteristics and a corporation's value in emerging markets. A quantitative approach was adopted for seventy non-financial listed corporations from seven markets, including Brazil, Egypt, India, Russia, Saudi Arabia, South Africa, and Turkey. The data was collected annually from 2012 to 2021. After removing the outliers using winnowing at 1% and testing the stationary data, the study discovered that ownership structure characteristics and Common Stock’s Liquidity, under the control variables, determine the corporation's value in emerging markets by 69.35% according to panel data analysis but by 69.1% according to hierarchical regression analysis. Finally, the study found that Common Stock Liquidity played a significant mediating role, resulting in an average increase of 47.7% in interpreting the change in the value of the corporation in emerging markets. Therefore, common stock liquidity has a significant impact on the value of a corporation and should not be overlooked by top management and investors when making investment decisions in the stock exchange. Thus, common stock liquidity is one of the factors that create value for shareholders in emerging markets.