TY - JOUR
T1 - Board effectiveness and firm value
T2 - A mediating role of stock liquidity
AU - Rehman, Ramiz U.R.
AU - Naseem, Muhammad Akram
AU - Hasan, Mudassar
AU - Ahmad, Muhammad Ishfaq
AU - Demir, Ender
N1 - Publisher Copyright:
© 2023 World Scientific Publishing Company.
PY - 2023/6/13
Y1 - 2023/6/13
N2 - We test whether an effective board affects firm value (FV) in Pakistan and whether stock liquidity (LIQ) mediates this relationship. To test this conjecture, we introduce an effective board index (EBI) using board size, board independence, board diversity and CEO duality. By employing the fixed effect model, we find that an effective board reduces agency costs and thus increases FV. An effective board may signal investors positively regarding reduced information asymmetry, thereby increasing stock LIQ. Furthermore, stock LIQ partially mediates the relationship between the effective board and FV. However, only Amihud illiquidity mediates this relationship, which suggests the stock liquidity's estimation matters.
AB - We test whether an effective board affects firm value (FV) in Pakistan and whether stock liquidity (LIQ) mediates this relationship. To test this conjecture, we introduce an effective board index (EBI) using board size, board independence, board diversity and CEO duality. By employing the fixed effect model, we find that an effective board reduces agency costs and thus increases FV. An effective board may signal investors positively regarding reduced information asymmetry, thereby increasing stock LIQ. Furthermore, stock LIQ partially mediates the relationship between the effective board and FV. However, only Amihud illiquidity mediates this relationship, which suggests the stock liquidity's estimation matters.
UR - http://www.scopus.com/inward/record.url?scp=85163156441&partnerID=8YFLogxK
U2 - 10.1142/S0217590823500261
DO - 10.1142/S0217590823500261
M3 - Article
AN - SCOPUS:85163156441
SN - 0217-5908
JO - Singapore Economic Review
JF - Singapore Economic Review
ER -