Relationship between Stock Liquidity and Investment Opportunities

Subject Areas : Financial Knowledge of Securities Analysis

حسین کاظمی ^{1 *} , عباس حیدری ^{2 *}

1 - ندارد
2 - مسئول مکاتبات

Received: 2012-04-16 Accepted : 2012-07-26 Published : 2013-03-10

Keywords: stock liquidity, information asymmetry, investment opportunities, Expected&#x0D, &#x0D, Returns,

Abstract :

One of risks which relevance with firm’s stock is stock liquidity. Stock with highliquidity for stockholders and investments have been attractive and increase demand forit. Increasing in demand and attractive for firm’s stock, leads to easy and inexpensivefinancing and increase in firm’s expanding. More over decrease expected returns ofstockholders. Therefore in this article investigate relationship between stock liquidity andinvestment opportunities which liquidity measure with bid- ask spread, the period from1383 to 1389(Iranian calendar). Results show that there is a positive and relationsignificant between stock liquidity and investment opportunities. More overThere is a negative and significant between stock liquidity and expected returns. Onthe other hand liquidity is one of ingredient which increase firm’s opportunities anddecrease cost of equity capital.