An Analysis of Institutional Investors, Information Asymmetry, and Stock Market Liquidity: Empirical Evidence from Pakistan Stock Exchange (A Sector Wise analysis in Pakistan Stock Exchange)

Institutional Investors, Information Asymmetry, and Stock Market Liquidity

Abstract

The endeavor of the empirical study is analyzing institutional investors (Ins.Invs) with respect to market liquidity (ML) and information asymmetry (Inf.Asym) in Pakistan stock exchange (PSX).A significant sample period of ten years was taken for fuel and energy, textile, food, and cement sectors by applying panel data econometric techniques to identify the relationship of Ins.Invs on ML and Inf.Asym. The secondary data of the variables have gathered from annual reports of the firms, published reports of the State Bank of Pakistan (SBP) and the official website of PSX. Using fixed effect model (FEM) based on Hausman test the study concluded that the Ins.Invs. positively and significantly affect the ML and Inf.Asym and declared that the investors are heterogeneous (both active and passive).