Cultural diversity in ownership and stock liquidity

Abstract

In this study, we explore the relationship between cultural diversity in ownership and stock liquidity. We manually collect foreign investors’ countries of origin data from 2003 to 2017 to measure the cultural diversity in the ownership of Chinese listed firms. Our results show that cultural diversity in ownership reduces stock liquidity, and these results are robust to endogeneity examinations. In addition, market valuation uncertainty exaggerates the effect of cultural diversity in ownership on stock liquidity.