Ownership structure and stock market liquidity: evidence from Tunisia

The aim of this paper is to identify and analyse the influence of ownership concentration on stock market liquidity in general, and the adverse selection component of the spread in particular for a panel of Tunisian firms from 2001 to 2007. We document that firms with greater insider ownership display significantly lower liquidity. The negative relation between liquidity and insider ownership is attributable to adverse selection. We also find that the only negative correlation between blockholders and liquidity persists is that with turnover. Thus, it appears that blockholders decrease liquidity. We find that ownership effect depends on the owner identity. Our results suggest that state ownership is negatively related to spread, and positively related to market depth. Foreign ownership has no significant effect on liquidity measures.