The Effects of Stocks Return Volatility on Working Capital Accruals with Moderating Effects of Life Cycle and Ownership Structure of Firms

Subject Areas : Business Strategy

Mohsen Dastgir ¹ , Nader khedri ² , Afsaneh Soroushyar ³

1 - Department of Accounting, Faculty of Human Science, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
2 - Department of Accounting, Faculty of Human Science, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
3 - Department of Accounting, Faculty of Human Science, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

Received: 2019-12-09 Accepted : 2020-03-15 Published : 2020-03-01

Keywords: investment, Accruals, Ownership Concentration, institutional investors,

Abstract :

In this research using theoretical predictions from a real option-based investment framework, the present study aims to examine the effects of stock returns volatilities on changes of working capital accruals of firms. In addition, the moderating effect of variables such as, life cycle and ownership structure on the relationship between stock return volatilities and working capital accruals is studied. The statistical sample of this research consists of 111 firms accepted in Tehran Stock Exchange from 2004 to 2017.The research hypotheses are also examined by Generalized Least Squares (GLS) regression analysis. The results show that there is a significant negative relationship between volatilities of stock return and changes of working capital accruals of firms in general. On the other hand, results indicated that the effect of stock returns volatilities on firms is not the same in different stages of life cycle. this negative effect is at its highest level for mature companies and lowest level for decline companies and in the end results indicated that both ownership concentration and institutional investors in ownership structure of firms decreases the negative effect of stock returns volatilities on firms working capital accruals.