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Korean Journal of Financial Studies 2016;45(5):1131-1165.
Published online December 31, 2016.
Institutional Trading, Stock Liquidity, and Firm Value
Hyung Chul Lee
기관투자자 거래가 주식 유동성과 기업 가치에 미치는 영향
This research investigates the relation between trades by institutional investor and stock liquidity and the relation between institutional trading and firm value. Multiple informed institutional investors will improve information environment in stock markets and reduce information asymmetry, resulting in increase in stock liquidity. In this sense, we expect that institutional trading will enhance stock liquidity and increase stock price and firm value. Using stock price and trading volume data of companies listed on Korea Stock Exchange from 2003 to 2013, empirical analyses have been conducted. As I expect, I find that firms with more institutional trades have higher level of stock liquidity and firm value. In addition, this positive relation between institutional trading and stock liquidity and that between institutional trades and stock price are more distinct in case of firms with higher level of information asymmetry. I hope that the findings are helpful for stock investors and financial mangers of companies. To the best of my knowledge, this is the first study linking the relation between trades by institutional investor and stock liquidity with the relation between institutional trading and stock price in Korean Stock Market. I hope that this study catalyzes related researches in the future.
Key Words: 기관투자자,기업 가치,정보거래자,정보비대칭,주식 유동성,Firm Value,Information Asymmetry,Informed Trade,Institutional Investor,Stock Liquidity
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