Electronic Theses and Dissertations





Document Type


Degree Name

Doctor of Philosophy



Committee Chair

Pankaj K. Jain

Committee Member

Thomas McInish

Committee Member

Michael Pagano


The dissertation is composed of two essays. The first essay finds that corruption decreases liquidity available to institutional traders and discourages foreign portfolio investment inflows into a country. It increases investors' order execution risks as well as corporations' cost of equity capital. These effects are noticed in country level panel data regressions as well as firm level event-study tests for companies that violate the U.S. Foreign Corrupt Practices Act. The effect of corruption on foreign equity investment is nonlinear and reverse J-shaped, with intermediate levels of corruption yielding the most negative effects on foreign portfolio investment in our study of 49 countries, after controlling for several other macro-level institutional variables. The second essay empirically investigates how firm-specific certification practices through corporate governance can reduce perceived ambiguity and thus enhance liquidity of a firm in the stock market. We show that better corporate governance help to reduce ambiguity. In addition, a reduction in ambiguity is significantly related to higher liquidity of firms. Our results are robust to alternative model specifications, measures of ambiguity, and corporate governance indices, andremain statistically significant after controlling for other known determinants of ambiguity and liquidity. Our results shed light on how ambiguity can be moderated through firm-level certification practices and on the channel through which a moderation of ambiguity affects shareholder wealth.


Data is provided by the student.

Library Comment

Dissertation or thesis originally submitted to the local University of Memphis Electronic Theses & dissertation (ETD) Repository.