Market efficiency can be enhanced by market liquidity if it promotes value creation, leading to increasing stock returns. A positive relation between liquidity and stock returns implies capital movement towards more efficient investment at a low cost for value creation. Existing studies are controversial for the relation being positive, negative, or inconclusive. With such inconsistency, this paper uses data from more than 3,200 company stocks from the UK, the United States, Germany, and China securities markets over a 10-year period to estimate the relation across these four markets, respectively. The framework of estimation is robust to outliers and macro shocks, while eliminating the issues of multicollinearity, autocorrelation, and endogeneity. The study finds some interesting results. We report strong evidence for Germany and the UK of a positive relationship between returns and liquidity. In contrast, China exhibits the opposite result, and the United States provides inconclusive evidence, possibly caused by significant diversification of value perception on liquidity. Our results imply that the German and the UK markets are more efficient than the emerging market of China because liquidity assists capital movement more efficiently. The policy implication of this research is that, for emerging stock markets, the costs of capital movement should be reduced in order to increase the efficiency of funding allocation.

Despite three decades of reform, China's electricity sector is still organized by a “new reformed plan” where capacity investment has been liberalized but prices and production remain controlled. This paper examines the impact of the current plan prices on end-users with reference to the OECD and how the plan price of electricity supply is formed. We argue that the plan price is set in an attempt to balance the interests of the public and the power industry. We find that China's industries do not pay a cheaper price for electricity than the West, and the plan price is formed through bargain between the firm and the state, which allows the firm to have a soft price constraint on its costs.