Ownership structure, market liquidity, and financial reputation

Market liquidity refers to the ability of an asset to be sold in the financial markets without generating a significant impact on the price and thus the value of the security. The liquidity of an asset is, along with the risk and return of the same security, a key attribute influenced by information asymmetries in the markets and corporate governance, the lack of which can have consequences for the value of firms. The objective of the book is to analyze how market liquidity in Italy is affected by corporate governance, with particular reference to ownership structure. Not only is the direct effect of ownership concentration on market liquidity examined but, the role of external parties that provide information to the market about the firm is also analyzed: financial analysts. A good corporate governance system helps to improve the financial transparency and disclosure of the firm, reduce problems of information asymmetry, and increase the ability of investors to appreciate the qualities of managerial choices and the actual impact on economic value.