Workshop Series: Yu Jing
Foreign block ownership has grown rapidly as the progress of stock market liberalization in the last decade. In view of the substantial presence of foreign blockholders, we investigate direct impact of foreign block ownership on the company's stock liquidity for a sample of international companies from 40 countries. We document strikingly negative liquidity effects of foreign block ownership in the majority of our sample countries. We conduct further analyses to uncover the two possible explanations for foreign blockholders' negative impact on stock liquidity. The results show that the presence of foreign block ownership decreases the number of free-float shares available to the public, which suggests that the inactive trading of foreign blockholders dampens the trading activities and renders real friction in the stock market. Moreover, the negative liquidity effects of foreign blockholders are most pronounced for companies with more information uncertainty and for countries with low quality information disclosure. This finding is consistent with the notion that foreign blockholders are perceived as informed traders and thereby discourage the participation of liquidity traders. Join our staff, students and alumni attending workshops presented by visiting academics on their area of research expertise.
Jing Yu started her first academic job at the Accounting&Finance discipline at UWA after graduating from Nanyang Tech University, Singapore in 2009. The focus of Jing’s research is mainly on international finance, corporate governance, and empirical market microstructure. So far she has published one paper from her PhD dissertation in Journal of Banking and Finance and has several papers under review with good quality international finance journals.