2019

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Browsing 2019 by Author "Saud"

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    Transparency, Liquidity, and Market Value
    (UMT.Lahore, 2019-02) Saud
    The history of finance has witnessed a number of crises over the period of time since its emergence. Among the most significant are the 1930’s Great Depression, Oil Crises, Black Monday, Asian Financial Crisis, and the 2008 Global Meltdown. All of these events have one thing in common; impact on the liquidity of the stocks. In the aftermath of the 2008 global meltdown findings suggested that transparency was the key factor causing a liquidity freeze in the market. Finding no such study in Pakistan which had investigated the relationship of transparency and liquidity this research vows to fulfill the gap. It therefore attempts to investigate the effect of transparency on the liquidity of the stock, extreme market events, and commonality of the liquidity. Further, it also investigates whether the variability of liquidity, extreme market events, and commonality of liquidity have any effect on the market value of the stock. A sample of 40 firms from PSX-100 Index comprising of 320 observations were taken for the years starting from 2010 to 2017. Analyzing the data using Ordinary Least Square (OLS), Generalized Least Squares (GLS), and Panel regression model it was found that earning smoothing is negatively associated with the variability of the liquidity and positively with LBH. Moreover, Liquidity volatility and LBH were also negatively associated with the TOBIN-Q. Earnings management in the Pakistan’s financial market is positively perceived by both analysts and investors. The implications of this these findings will urge the regulators in developing a framework focusing on the earnings management.