Volume 2 • Issue 2 | June, 2018

The Effects of Stock Liquidity on Firm Investment in Vietnam

Le Ha Diem Chi

Abstract: In recent years, there is growing concern about stock liquidity among factors affecting corporate investment decisions. Based on data from 206 listed companies in Vietnam stock market from 2007 to 2014, the author used the econometric technique of S-GMM estimator for panel data analysis, and it is found that stock liquidity positively affects size of corporate investment in Vietnam. More specifically, high liquid stocks help firms raise fund more easily. In addition, this study shows that external financing is less preferable to internal financing.