The link between stocks liquidity and firm’s performance in the Mena Region

Dissertant

Zahrah, Bouaich Fatimah

Thesis advisor

Faruq, Umar

University

Al Akhawayn University

Faculty

The School of Business Administration

University Country

Morocco

Degree

Master

Degree Date

2010

English Abstract

How can small investors infer value relevant information from publicly available data in information scarce emerging markets? Using a large dataset from the MENA region (Morocco, Egypt, Qatar, Saudi Arabia, United Arab Emirates, Jordan, Kuwait, and Bahrain), we document a significantly positive relationship between liquidity and firm performance.

We argue that lower level of information exposes stock market participants to excessive risk, and therefore any mechanism that can provide them with opportunity to lower this risk (by exiting the stock) is valuable.

Our results also show that this relationship is stronger in civil law countries than in common law countries.

Civil law countries have lower information disclosures and thus expose investors to more risk.

As a result, liquidity is valued more in civil law relative to common law countries.

We also show that the relationship between liquidity and firm performance breaks down during the crisis period.

We argue that excessive panic during the crisis period may increase the liquidity (i.e.

turnover), but it does not necessarily result in better performance of firms.

Main Subjects

Business Administration
Financial and Accounting Sciences

Topics

• Financing
• Investments
• Business management
• Industrial management
• Business enterprises
• Evaluation
• Middle East
• Performance

No. of Pages

29

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-625883