Investigating of the relationship between liquidity and firms’ ownership concentration whit considering moderating role of corporate governance
Subject Areas : Corporate Finance
shokrollah khajavi
1
,
GholamReza Rezaei
2
,
Amir Safaiee
3
1 - Accounting department, faculty of economics, Shiraz university, Shiraz, Iran,
2 - Assistant Professor of Accounting, University of Sistan and Baluchestan, Zahedan, Iran.
3 - Department of Accounting, Marvdasht Branch, Islamic Azad University, Marvdasht, Iran
Keywords: Corporate Governance, Liquidity, Ownership Concentration, board independent, audit fee,
Abstract :
The main purpose of this research is to study the relationship between ownership concentration and liquidity for the companies listed on Tehran Stock Exchange (TSE) with considering moderating role of corporate governance. Another Aim was from purpose of this study is to extend priorresearch on this topic. to achieve goals, an attempt will be made to answer the following question: “Is there a significant relationship between ownership concentration, corporate governance, and liquidity?” The research population composes of total companies listed in the TSE and statistical sample composes of 145 companies. The regression analysis whit SPSS and Eviews software are used for testing hypothesis of the research. The results suggest that there is a negative relationship between ownership concentration and liquidity. The relationship between corporate governance and liquidity is positive and significance. Also, the results showed that corporate governance have a moderating role in the relationship between ownership concentration and liquidity.
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Sun, B. and Y. Gao (2020). Market liquidity and macro announcement around intraday jumps: Evidence from Chinese stock index futures markets. Physica A: Statistical Mechanics and its Applications, Vol. 541, pp. 123-142.
Yagoubnejad, A. and A. Zabihi (2011). The Relationship between Disclosure Quality and Stock Liquidity in listed Companies on Tehran Stock Exchange. Financial Knowledge of Securities Analysis, Vol. 10, pp. 217-235. (in persian)
Ye, Q., Zhou, S. and J. Zhang (2020). Short-selling, margin-trading, and stock liquidity: Evidence from the Chinese stock markets. International Review of Financial Analysis, Vol. 71, pp. 36-48.
Zelenyuk, V. and V. Zheka (2006). Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine. Journal of Productivity Analysis, Vol. 25, pp. 143–157.
_||_Ali, S., Liu, B. and J.J. Su (2018). Does corporate governance quality affect default risk? The role of growth opportunities and stock liquidity. International Review of Economics and Finance, Vol. 58, pp. 422-448.
Amihud, Y. (2002). Illiquidity and stock returns: Cross-section and time series effects. Journal of Financial Markets, Vol. 5, pp. 31-56.
Brennan, N. M. and J. Solomon (2008). Corporate governance, accountability and mechanisms of accountability: an overview. Accounting, Auditing & Accountability Journal, Vol. 21, No. 7, pp. 885-906.
Chung, K., Elder, J. and J. Kim (2010). Corporate Governance and Liquidity. Journal of Financial and Quantitative Analysis, Vol. 45, No. 2, pp. 265-291.
Chung, K., Van Ness, B. F. and R. A. Van Ness (1999). Limit orders and the bid-ask spread. Journal of Financial Economics, Vol. 53, pp. 255-287.
Darmadi, S. (2016). Ownership concentration, family control, and auditor choice: Evidence from an emerging market. Asian Review of Accounting, Vol. 24, No. 1, pp. 19-42.
Dennis, P. and J. Weston (2001). Who's informed? An analysis of stock ownership and informed trading. American Finance Association Conference.
Etemadi, H., Resaiyan, A. and H. Kordtabar (2010). The relationship between some corporate governance tools and stock liquidity. Journal of Development and Capital, Vol. 3, No. 5, pp. 31-59. (in persian)
Fieldman, D. C. (2004). The devil is in the details: converting good research in to publishable articles. Journal of Management, Vol. 30, pp. 1-6.
Gholipour, R., Mashayekhi, B. and A. Naseri (2016). Corporate governance in the public sector and its role in a resistance economy. Quarterly Journal of Fiscal and Economic Policies, Vol. 14, pp. 107-130. (in persian)
Glosten, L. and P. R. Milgrom (1985). Bid, ask, and transaction prices in a specialist market with heterogeneously informed agents. Journal of Financial Economics, Vol. 14, pp. 71-100.
Harris, L. (1994). Minimum price variations, discrete bid-ask spreads, and quotation sizes. The Review of Financial Studies, Vol. 7, pp. 149-178.
Heflin, F. and W. K. Shaw (2000). Blockholder ownership and market liquidity. Journal of Financial and Quantitative Analysis, Vol. 35, pp. 621-633.
Hormozi, S. and R. Talebpoor Asl (2014). Surveying the relationship between Liquidity, Corporate Governance and the Value of Public Companies in Tehran Stock Exchange. Journal of Applied Research in Financial Reporting, Vol. 3, No. 4, pp. 49-74. (in persian)
Jahankhani, A. and S. Gorbani (2006). Identifying and Determining the Determinants of Profit Sharing Policy of Companies Listed in Tehran Stock Exchange Organization. Financial Research Journal, Vol. 7, No. 2, pp. 27-48. (in persian)
Jensen, M. C. and W. H. Meckling (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, Vol. 3, pp. 305–360.
Johnson, J., Boone, P., Breach, A. and E. Friedman (2000). Corporate governance in the Asian financial crisis. Journal of Financial Economics, Vol. 58, No. 1-2, pp. 141-186.
Jung, H. and S. Choi (2021). The effects of employee stock ownership on stock liquidity: Evidence from the Korean market. The North American Journal of Economics and Finance, Vol. 58, pp. 74-93.
Kashanipour, M., Mehrani, S. and Y. Pashanejad (2010). Investigating the relationship between some mechanisms of corporate governance system and market liquidity. Financial accounting research, Vol. 2, No. 2, pp. 61-76. (in persian)
Kashanipour, M., Raee ezabadi, M.E. and M. Ershadi (2017). The Impact of corporate governance mechanisms on medium term financial reporting delays: A case study of Tehran Stock Exchange. Quarterly Journal of Fiscal and Economic Policies, Vol. 17, pp. 169-194. (in persian)
Kini, O. and S. Mian (1995). Bid-ask spread and ownership structure. Journal of Financial Research, Vol. 18, pp. 401-414.
Leano, M. and A. Pedraza (2018). Ownership concentration and market liquidity: Evidence from a natural experiment. Economic Letters, Vol. 167, pp. 56-59.
Lemmon, M. L. and K. V. Lins (2003). Ownership structure, corporate governance, and firm value: evidence from the East Asian financial crisis. The Journal of Finance, Vol. 58, No. 4, pp. 1445-1468.
McInish, T. and R. Wood (1992). An analysis of intraday patterns in bid/ask spreads for NYSE stocks. The Journal of Finance, Vol. 47, pp. 753-764.
Mehrani, S. and A. Resaiyan (2009). Stock Liquidity and assets liquidity. Auditor, Vol. 46, pp. 52-56. (in persian)
Mohamdzadeh, F. (2020). Investigating the relationship between concentration of ownership and stock liquidity in companies listed on the Tehran Stock Exchange. Economic Studies, Financial Management and Accounting, Vol. 6, No. 1, pp. 60-67. (in persian)
Moradi, A. and M. Ghorbanian (2020). The role of moderating the quality of financial reporting on the relationship between corporate governance and stock liquidity risk. New Research Approaches in Management and Accounting, Vol. 28, pp. 15-32. (in persian)
Nadarajah, S., Ali, S., Liu, B. and A. Huang (2018). Stock liquidity, corporate governance and leverage: New panel evidence. Pacific-Basin Finance Journal, Vol. 50, pp. 216-234.
Prommin, P., Jumreornvong, S., Jiraporn, P. and S. Tong (2016). Liquidity, ownership concentration, corporate governance, and firm value: Evidence from Thailand. Global Finance Journal, Vol. 31, pp. 73-87.
Rahimian, N., Babaie, F. and H. Jahangiri (2016). Investigation the Relationship between Performance Evaluation Criteria and Corporate Value. Journal of Applied Research in Financial Reporting, Vol. 5, No. 8, pp. 51-72. (in persian)
Rahmani, A. and H. Haji Moradkhani (2017). ProductMarket Power and Stock Market Liquidity. Journal of Asset Management and Financing, Vol. 5, No. 2, pp. 21-36. (in persian)
Robin, A. (2007). Ownership level, Ownership Concentration and Liquidity. Journal of financial market, Vol. 10, pp. 219-248.
Saieedi, A. and O. Dadar (2007). Investigating the Relationship between Stock Liquidity and Liquidity Index of Previous Periods in Tehran Stock Exchange. Industrial Management Studies, Vol. 6, No. 16, pp. 75-97. (in persian)
Salehi, A. (2021). impact of corporate governance strength on stock market liquidity: Emphasizing criteria Amihud, transaction volume and bid-ask spread. Investment knowledge, Vol. 10, No. 37, pp. 37-55. (in persian)
Samarasinghe, A. and K. Uylangco (2021). An examination of the effect of stock market liquidity on bank market power. International Review of Financial Analysis, Vol. 77, pp. 101-118.
Sarin, A., Shastri, K. and K. Shastri (1996). Ownership structure and stock market liquidity. Working paper. Santa Clara University.
Setayesh, M., Rezaei, G., Ziari, S. and F. Kazemnejad (2013). Investigating the relationship between financial information quality and financing constraint of Companies Listed in Tehran Stock Exchange. Financial Accounting Quarterly, Vol. 19, pp. 21-45. (in persian)
Shleifer, A. and R. W. Vishny (1997). A survey of corporate governance. The Journal of Finance, Vol. 52, No. 2, pp. 737-783.
Stagliano, R., Rocca, M.L. and D. Gerace (2018). The impact of ownership concentration and analyst coverage on market liquidity: Comparative evidence from an auction and a specialist market. Economic Modelling, Vol. 70, pp. 203-214.
Sun, B. and Y. Gao (2020). Market liquidity and macro announcement around intraday jumps: Evidence from Chinese stock index futures markets. Physica A: Statistical Mechanics and its Applications, Vol. 541, pp. 123-142.
Yagoubnejad, A. and A. Zabihi (2011). The Relationship between Disclosure Quality and Stock Liquidity in listed Companies on Tehran Stock Exchange. Financial Knowledge of Securities Analysis, Vol. 10, pp. 217-235. (in persian)
Ye, Q., Zhou, S. and J. Zhang (2020). Short-selling, margin-trading, and stock liquidity: Evidence from the Chinese stock markets. International Review of Financial Analysis, Vol. 71, pp. 36-48.
Zelenyuk, V. and V. Zheka (2006). Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine. Journal of Productivity Analysis, Vol. 25, pp. 143–157.