Evaluation on the Relationship between Assets Liquidity and Stock Liquidity
Subject Areas :Manizheh Firoozi 1 , Hassan Hemmati 2 , Hassan Ghodrati 3
1 - کارشناس ارشد حسابداری
2 - استادیار و عضو هئیت علمی موسسه آموزش عالی رجا قزوین
3 - استادیار و عضو هئیت علمی دانشگاه آزاد اسلامی واحد کاشان
Keywords: assets liquidity, turnover ratio, stock liquidity, managerial actions, Information Asymmetry,
Abstract :
Stock Liquidity risk can be thought as one of the factors affecting the investors expected return. Clarifying a measure according to the specifics of the company to measure the stock liquidity could help the investors to make better decisions. In this study, we examine the relationship between assets liquidity and stock liquidity in hole of druggist firms listed in Tehran Stock Exchange during the years 1387 and 1388. We use the turnover ratio. The results show that there is a significant relationship between the assets liquidity and stock liquidity. This relationship depends on market expectations regarding the deployment of the firm's liquid assets. Thus our hypothesis links stock liquidity to managerial actions that change the liquidity of the firm's assets, such as investment financing, and payout. Consistent with my prediction, I find that after controlling for firm fixed effects, increase in asset liquidity increases stock liquidity, too.The relation is stronger when the manager is less likely to convert liquid assets into illiquid assets such as for low market to book, during economic recessions, and when expected payout is high.
