The effect of foreign ownership on liquidity in the food and beverage industry listed on the Indonesia stock exchange

Abstract

- Foreign institutional ownership is considered a favorable signal by the market, showing more transparency and a low level of asymmetric information that is expected to increase company liquidity and increase investor confidence. This study aims to provide empirical evidence about the effect of foreign share ownership on liquidity. the dependent variable of this study is Liquidity which is divided by four different sizes. The independent variable of this study is foreign ownership and the control variable consists of company size, stock price, trading volume and return volatility. the sample consists of 34 companies in the food and beverage sub-sector in Indonesia over a period of 3 years (2019-2021) and uses a panel data regression model in its testing. The results of the research conducted explained that foreign ownership has no significant effect on liquidity. Firm size has a significant positive effect on LR and LnDEPTH, but does not have a significant effect on RQS and ILLIQ. Stock prices have a significant positive effect on the relative quoted bid-ask spread (RQS). The implication for company managers is to increase firm size by increasing the fixed assets or current assets of a company, while investors can see the high total assets of a company before investing. Stock prices have a significant positive effect on the relative quoted bid-ask spread (RQS). The implication for company managers is to increase firm size by increasing the fixed assets or current assets of a company, while investors can see the high total assets of a company before investing. Stock prices have a significant positive effect on the relative quoted bid-ask spread (RQS). The implication for company managers is to increase firm size by increasing the fixed assets or current assets of a company, while investors can see the high total assets of a company before investing.