Liquidity, ownership and corporate governance in caribbean firms

Abstract

This paper examines the liquidity, ownership and corporate governance relationship in a Caribbean setting. Results show that concentrated ownership reduces liquidity and large shareholdings have implications for liquidity. As the largest shareholder, government and foreign holding companies are less liquid; whilst liquidity is linked to foreign institutions. Firms with holding company (domestic and foreign) as the second largest shareholder are less liquid. Other results show that some corporate governance standards improve stock liquidity. This study shows that the results are unlikely confounded by endogeneity; are robust to different measures of liquidity; and the interaction of large shareholdings and corporate governance is not significant - hinting that large shareholdings substitute for corporate governance rather than complement it.