The Moderating Role Of Institutional Quality On The Relationship Between Board Structure And Stock Liquidity

Abstract

The purpose of the study is to examine the moderating impact of  Institutional Quality on the association between board structure and stock liquidity by following the theory of agency and information asymmetry. We have used the data of 230 listed non-financial firms from 2009 to 2019.  Board and IQ indices are established through PCA.  An instrumental variable approach is used to study the association between board structure and stock liquidity.  For the moderating effect of IQ, we have followed the phenomenon of resource complimentary. The findings are significantly positive for the association between board structure and stock liquidity. Study findings suggest that the association between board structure and stock liquidity is positively moderated by the institutional quality index. The results are robust to a sequence of endogeneity checks while using substitute proxies of stock liquidity.