Dr. Christine Jiang published in the Journal of Corporate Finance
For release: July 11, 2016
Dr. Christine Jiang, professor in the Department of Finance, Insurance, and Real Estate, recently had her paper accepted for publication in the Journal of Corporate Finance. Dr. Jiang co-authored the paper with two former Fogelman College Ph.D. students, Pawan Jain, University of Wyoming Laramie, and Mohamed Mekhaimer, School of Business Clarkson University. The paper is entitled "Executives' Horizon, Internal Governance, and Stock Market Liquidity."
In this article, the authors examine whether internal governance, the process through which subordinate managers effectively monitor the chief executive officer (CEO), can improve a firm's liquidity. Using the difference in horizons between a CEO and his immediate subordinates to measure internal governance, they show that firms with better internal governance have lower information asymmetry and higher liquidity. Furthermore, they show that internal governance is effective in enhancing liquidity for firms with CEOs close to retirement, firms that require higher firm- specific skills, and firms with experienced subordinate managers. The results are robust to inclusion of conventional governance measures, alternative model specifications, and different measures of internal governance and liquidity.