Fiduciary or loyalty? Evidence from top management counsel and stock liquidity
Document Type
Journal Article
Publication Title
Global Finance Journal
Volume
52
Publisher
Elsevier
School
School of Business and Law
RAS ID
40636
Abstract
We examine whether and how corporate top management counsel (TMC) influences stock liquidity and document a significant positive association. Our results remained robust to a series of sensitivity tests and continue to hold after accounting for potential endogeneity concerns. We identify a reduction in information asymmetry and business risk as the channel through which TMC affects stock liquidity. Further tests reveal that the positive relationship is stronger when the CEO has no legal expertise and in the post-SOX period, where firms are mandated to have in-house counsel. Our paper contributes to the ongoing debate on the dual paradox of TMC's role (gatekeeper v. facilitator) and has policy implications.
DOI
10.1016/j.gfj.2022.100709
Access Rights
subscription content
Comments
Michael, M., Ali, M. J., Atawnah, N., & Muniandy, B. (2022). Fiduciary or loyalty? Evidence from top management counsel and stock liquidity. Global Finance Journal, 52, 100709.
https://doi.org/10.1016/j.gfj.2022.100709