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Informational Efficiency and Governance in Restricted Share Settings: Boosting Family Business Leaders' Financing Decisions by Daniel Dupuis; Virginia Bodolica; Martin Spraggon is a Business, Management and Accounting article available to read on EtoBox.

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## Purpose Volume-based liquidity ratios suffer from potential measurement bias due to share restriction and may misrepresent actual liquidity. To address this issue, the authors develop two modified metrics, the free-float liquidity and the alternative free-float illiquidity ratios. These measures are well suited to estimate liquidity in the presence of trading constraints, as can be found in closely held/state-owned entities, IPOs/SEOs with lockup restrictions, dual-class share structures and family-owned businesses. ## Design/methodology/approach The authors modify the turnover illiquidity ratio, where the number of outstanding shares is scaled by the public free float, and use natural log transformation to normalize free-float liquidity. Our dataset is composed of daily observations for US stocks included in the S&P 500 index over the 2015–2018 period. To test the validity of free-float (il)liquidity ratios, the authors perform a correlation analysis for various liquidity metrics. To examine their empirical efficiency, the authors employ pooled OLS regression models for family firms as a subsample of liquidity-constrained entities, relying on five different identifiers of famil

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Author

Daniel Dupuis; Virginia Bodolica; Martin Spraggon

Publisher

Emerald

Published

2021

Language

EN

Field

Business, Management and Accounting (Social Sciences)