Does Social Capital Enhance Stock Liquidity? An Investigation of the Resilience of the Trading Environment During a Crisis of Trust-Reference-Cited by-同舟云学术

Does Social Capital Enhance Stock Liquidity? An Investigation of the Resilience of the Trading Environment During a Crisis of Trust

Published:2024-02-25 Issue:3 Volume:60 Page:627-664
ISSN:0001-3072
Container-title:Abacus
language:en
Short-container-title:Abacus

Author:

Faff Robert¹,Huang Jianning²,Shao Pei³,Xiao Yuchao⁴,Zhou Fuzhao⁵

Affiliation:

1. Bond Business School Bond University 4229 Gold Coast, Bond Australia

2. Asper School of Business University of Manitoba 181 Freedman Crescent Winnipeg MB R3T 5V4 Canada

3. Dhillon School of Business University of Lethbridge 345‐6 Ave SE Calgary AB T2G4V1 Canada

4. Deakin Business School Deakin University 70 Elgar Road Burwood VIC 3125 Australia

5. Schmidthorst College of Business Bowling Green State University 870 E Wooster St Bowling Green OH 43403 United States

Abstract

We investigate whether social capital and trust provide a form of liquidity/trading resilience, more specifically, whether social capital and trust played a role in the speed of stock recovery following activation of the market‐wide circuit breaker (MWCB) that occurred at the beginning of the COVID‐19 pandemic in March 2020. Our finding that high‐social capital firms rebounded more swiftly in terms of stock liquidity and quality of the stock trading environment provides new evidence that social capital and trust can safeguard firms’ stocks against a potential liquidity drain and rapid deterioration in the stock trading environment under extreme market conditions.

Publisher

Wiley

Link

https://onlinelibrary.wiley.com/doi/pdf/10.1111/abac.12318

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