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Using a panel of 3515 Chinese listed firms from 2011 to 2023, this study shows that the education level of the top management team (TMT) positively influences firm stock liquidity. The beneficial effect of TMT education on stock liquidity is stronger in settings with lower industry competition, higher information disclosure quality, and bull market periods. Mediation analysis indicates that analyst coverage provides a weak channel through which TMT education affects stock liquidity. Endogeneity concerns are alleviated by reverse causality tests, two-stage least squares regressions, propensity score matching, and generalized method of moments. The results are also robust to alternative liquidity measures and alternative definitions of TMT education. This study offers practical implications for investors, corporate executives, and policymakers seeking to promote market efficiency and liquidity.
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Wu et al. (2025) studied this question.
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