National Governance and Corporate Liquidity in Organization of Islamic Cooperation Countries: Evidence based on a Sharia-compliant Liquidity Measure

This paper investigates the determination of corporate liquidity in Organization of Islamic Cooperation (OIC) countries with emphasis on whether and how national governance (NG) has bearings on corporate liquidity in such countries. Using the Sharia-compliant liquidity measure to examine non-financial firms' liquidity in 22 OIC countries during the period 2000–2016, results reveal that liquidity determination in OIC countries resembles that in other countries. Additionally, NG positively affects corporate liquidity. Furthermore, the positive and negative effects of growth opportunities and leverage, respectively, on corporate liquidity strengthen with NG. Overall, results suggest that NG improves corporate governance in OIC countries. •Liquidity determination in OIC countries resembles that in other countries.•National governance (NG) positively affects corporate liquidity.•NG strengthens growth opportunities' positive effect on corporate liquidity.•NG strengthens leverage's negative effect on corporate liquidity.•NG improves corporate governance in OIC countries.