  Our main task is to study the effect of corporate governance on the market
liquidity of listed companies' stocks. We establish a theoretical model that
contains the heterogeneity of investors' beliefs to explain the mechanisms by
which corporate governance improves liquidity of the corporate stocks. In this
process we found that the existence of noise traders who are semi-informed in
the market is an important condition for corporate governance to have the
effect of improving liquidity of the stocks. We further find that the strength
of this effect is affected by the degree of noise traders' participation in
market transactions. Our model reveals that corporate governance and the degree
of noise traders' participation in transactions have a synergistic effect on
improving the liquidity of the stocks.
