Explain the relationship between transparency of firms and investor participation $($or trading activity$)$ among stock markets.

Investors participation is higher where there is

transparency.

Based on this relationship, how can governments of countries increase the amount of trading activity $($and therefore liquidity$)$ of their stock markets?

The government can allow

voting rights for shareholders,

legal protection,

enforcement of the laws, and $|$

stringent accounting requirements in order to increase the amount of trading activity of their stock markets.