Study on Relationship between Stock liquidity and managerial short-termism

Subject Areas : Financial Knowledge of Securities Analysis

Farzin Rezaei ¹ , Akram Firouz Alizadeh ² , Radman Malihi Shojae ³

1 - Associate Professor of Accounting. Faculty member Of Islamic Azad University Branch, Qazvin ,Iran.
2 - Instructor University College Of Ershad-Damavand.
3 - Ph.D. Student of Accounting - Islamic Azad University, Anzali International Branch

Received: 2018-05-26 Accepted : 2018-08-14 Published : 2020-03-20

Keywords: stock liquidity, Management consulting, earning management,

Abstract :

Many institutional investment decisions are based on the ease of liquidity of stocks and business units. Investors of these business units are always seeking to leverage their directors to make high-yield investment decisions in the short term. While other ordinary investors who hold a smaller percentage of the company's stock are looking to increase the value of the business unit in the long run.This study was studied with 82 companies in the period 2007-2015. To measure stock liquidity, Amihud's (2002) benchmark was used to measure managerial cash flow from deviations from actual operating activities and real earnings management.. The results of the hypothesis test showed that liquidity of stock has a negative and significant effect on the deviation from actual operational activities. Also, companies with less liquidity are more likely to focus on gains in real profits. In the sense that reducing liquidity risk reduces the likelihood of deviations from actual operational activities.

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