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Explaining the relationship between the ownership structure and the liquidity of the shares of companies listed on the Tehran Stock Exchange

Number of pages: 258 File Format: word File Code: 29812
Year: 2014 University Degree: Master's degree Category: Librarianship
Tags/Keywords: corporate governance - Information asymmetry - Liquidity - Ownership structure - stock - Stock liquidity - stock market - Tehran Stock Exchange
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  • Summary of Explaining the relationship between the ownership structure and the liquidity of the shares of companies listed on the Tehran Stock Exchange

    Dissertation for Master's Degree

    Orientation: Accounting

    Abstract:

    According to the efficient market theory, one of the characteristics of an efficient and ideal market is the absence of transaction costs and, as a result, high liquidity. With the increase in liquidity, the cost of transactions will decrease significantly. Liquidity also plays an important role in the price discovery process. Considering the importance of liquidity, knowing the factors affecting it can help to improve it. The purpose of this research is to examine the relationship between the ownership structure and the liquidity of shares of companies listed on the Tehran Stock Exchange. The time period under study is between 1384 and 1388 and a total of 74 active stock companies were considered as a selected sample. The data were collected by using the new Rahavard software and calculated with the help of EXCEL software, and SPSS software was used to test the hypotheses and perform statistical analysis.

    In this research, the effect of the ownership structure from two aspects, the type of ownership and the concentration of ownership on the liquidity of the shares, has been investigated. The results of the hypotheses test show that there is an inverse (negative) relationship between the level of institutional ownership, the level of managerial ownership and the degree of concentration of ownership with the liquidity of shares. And there is a direct (positive) relationship between the level of corporate ownership and stock liquidity. Regarding foreign ownership, no information was found that indicates the ownership of foreign investors in the statistical sample companies. According to the obtained results, it can be concluded that one of the factors affecting the liquidity of shares is the ownership structure of companies.

    Key words: liquidity of shares, ownership structure, corporate governance, information asymmetry. Important publications have focused on themselves. The liquidity of an asset is: the ability to buy and sell that asset in the shortest possible time and cost. According to the definition of liquidity, it is realized in the absence of transaction costs. Liquidity plays an important role in the price discovery process and is a measure of market efficiency, especially in terms of information, Amihud, [1] 2005, in addition to the theoretical aspect, in practical terms and according to the existing realities such as the phenomenon of buying and selling queues and many other problems, it is necessary to pay attention to liquidity and try to solve this problem. One of the factors influencing the liquidity of stocks is the ownership structure of companies, and in this research we are looking for knowledge about the role of ownership structure in reducing the liquidity problems of stocks.

    [1] - Amihud et al, 200

    Introduction

    One of the basic issues in investment is the amount of liquidity[1] of assets. The role of the liquidity factor is very important in asset valuation. Because investors pay attention to the issue that if they want to sell their property, is there a suitable market for them or not? The liquidity of a stock sheet means that it can be sold quickly. The faster a stock can be sold at a lower cost, it can be said that that stock has more liquidity. Securities that are traded daily and frequently are more liquid and ultimately less risky than securities that are traded on a limited or infrequent basis (Yahiazadeh Far et al., 1389, 112) [2]

    The lower the liquidity of a share. That share will be less attractive for investment unless the owner gets a higher return. Liquidity is a function of the ability to perform a quick transaction of a high volume of securities and a low cost. It means that the price of the asset does not change much between the order and the purchase. The degree of liquidity of an investment is low when its fair price cannot be obtained quickly. The degree of liquidity of stocks is also effective in the decisions of investors in the formation of investment portfolios, in other words, rational investors demand more risk for stocks that have less liquidity, and their expected returns will be higher.

    In Iran, research has been done on the relationship between the ownership structure[3] and concepts such as corporate governance, company performance, profit and quality, and company value.But one of the issues that has been neglected in empirical research, not only regarding ownership structure, but also related to other fields, is the concept of stock liquidity. This study will examine the effects of ownership structure (type of ownership - concentration of ownership) on stock liquidity. But what is the importance of liquidity and why do we study it? One of the characteristics of an efficient and ideal market is the absence of transaction costs[4] and, as a result, high liquidity. Transaction costs include a wide range of costs in the form of obvious costs such as tax and brokerage and non-obvious costs due to information inefficiency. Accounting is one of the sources of information that can reduce the information inefficiency of the market by providing relevant and reliable information, thereby affecting the improvement of the liquidity of the companies' shares. Therefore, the liquidity of the shares can be considered as a measure of the efficiency of the market, especially in terms of information, and it can be widely used in the investigation of the factors affecting the provision of useful information (Rezapour, 2009, 2010)[5].

    In addition to the theoretical aspect, in terms of practicality and according to existing realities such as the queuing phenomenon buying and selling and many other problems, it seems necessary to pay attention to liquidity and try to solve this problem. An increase in liquidity can cause financial risk to be shared as much as possible by reducing portfolio costs and motivating investors more in their trading decisions. Studies show that the cost of transactions in American markets has been economically important (Lessmond et al., 1992) [6].     

    According to the role of liquidity in discovering the price of assets, distributing financial risk and reducing financial cost, it is important to know the factors affecting it. In the current research, the relationship between structure and ownership (type of ownership - concentration of ownership) and the liquidity of shares have been investigated.

    In the first chapter, after stating the research problem, we discuss the importance and necessity of the research, we also state the research objectives in the form of scientific and practical objectives, and then we refer to the theoretical framework and the realization analysis model.

     

     

     

     

    2-1 study history

    foreign studies

    row

    research subject

    researcher

    year

    result

    1

    market liquidity

    and ownership structure

    Cueto[7]

     

     

     

     

    2009

     

    The presence of institutional owners in the ownership structure reduces information asymmetry and has a positive effect on stock liquidity.

     

     

    2

     

    Institutional ownership and stock liquidity

     

    Agarwal [8]

     

     

    2008

     

    The general result of the research indicates that there is a non-linear relationship between institutional ownership and stock liquidity.

    3

     

    Ownership level, ownership concentration and liquidity

    Rubin[9]

     

    2007

    No relationship was observed between the ownership of groups within the company and liquidity, but the liquidity of shares has a direct relationship with the level of institutional ownership and with the concentration of institutional ownership. It has an inverse relationship.

     

     

    4

     

    Institutional ownership, information and liquidity

    Jennings [10] et al.

     

    2002

    The results of this research show that the presence of institutional owners reduces information asymmetry and increases liquidity.

    5

    Ownership concentration and stock liquidity

    Jacoby[11] and Jenek

    2010

    The results of their study indicate that more dispersion of ownership leads to the improvement of stock liquidity.

    6

    Ownership concentration and stock liquidity

    Kinney and Mian[12]

    1995

    There is no relationship between ownership concentration and the difference in the bid price of buying and selling shares.

  • Contents & References of Explaining the relationship between the ownership structure and the liquidity of the shares of companies listed on the Tehran Stock Exchange

    List:

     

    Abstract: 1

    Introduction: 2

    Chapter One: Research Overview

    1-1 Introduction 4

    2-1 Study history. 6

    3-1 statement of the research problem: 8

    4-1 theoretical framework: 10

    5-1 research assumptions: 15

    6-1 research goals: 16

    1-6-1 scientific goals: 16

    2-6-1 practical goals: 16

    7-1 importance and necessity of research: 16

    8-1 study limits. 17

    1-8-1 Research area. 18

    2-8-1 Time domain of research. 18

    3-8-1 Subject area of ??research. 18

    9-1 Definition of research words and terms. 18

    Chapter Two: A Review of Research Literature

    1-2 Introduction 22

    2-2 The First Speech: Ownership Structure. 23

    1-2-2 Ownership and management of economic units. 23

    2-2-2 Corporate governance. 25

    1-2-2-2 Definition of corporate governance. 29

    2-2-2-2 corporate governance mechanisms to support shareholders: 29

    3-2-2 different groupings of shareholders: 31

    1-3-2-2 types of shareholders according to the degree of control over the board of directors: 32

    2-3-2-2 types of shareholders according to the type of affiliation to the investing company: 32

    3-3-2-2 Types of shareholders according to ownership percentage: 33

    4-2-2 Ownership structures. 33

    1-4-2-2 Institutional investors. 34

    1-1-4-2-2 Hypotheses related to the regulatory role of institutional shareholders: 38

    2-1-4-2-2 pressure-sensitive and pressure-insensitive institutional investors: 39

    2-4-2-2 corporate investors. 39

    3-4-2-2 Managerial investors. 41

    4-4-2-2 Foreign investors. 45

    1-4-4-2-2 Foreign Investment Promotion and Support Law. 46

    2-4-4-2-2 The status of foreign investment promotion and support law. 46

    5-2-2- Representation theory. 47

    6-2-2 The relationship between ownership structure and capital market efficiency 49

    3-2 The second speech: Liquidity of shares 49

    1-3-2 Liquidity 49

    2-3-2 Liquidity criteria: 52

    1-2-3-2 Criteria based on stock orders: 53

    1-1-2-3-2 criteria for the difference in the bid price: 53

    2-1-2-3-2 the difference in the bid price: 54

    3-1-2-3-2 The theoretical basis for the bid price difference in securities: 54

    4-1-2-3-2 the components of the bid price difference: 56

    5-1-2-3-2 Estimated models of the price difference between buying and selling offers: 58

    2-2-3-2 Criteria based on transactions: 59

    3-3-2 Liquidity risk: 63

    4-3-2 Dimensions of market liquidity: 64

    5-3-2 Factors affecting liquidity in emerging markets. 65

    6-3-2 Factors affecting liquidity according to the level of development of markets 67

    7-3-2 Necessary measures to increase market liquidity. 68

    8-3-2 The concept of jump for liquidity 69

    9-3-2 Institutional ownership and liquidity of shares 69

    1-9-3-2 Theories defending the presence of institutional owners. 70

    1-1-9-3-2 regulatory hypothesis. 70

    2-1-9-3-2 hypothesis of informational efficiency 70

    2-9-3-2 theories against the presence of institutional owners. 72

    1-2-9-3-2 hypothesis of selection bias. 72

    2-2-9-3-2 Hypothesis of reduction of floating shares. 73

    10-3-2 Ownership structure and market liquidity. 74

    11-3-2 The combination of ownership and free floating shares 77

    12-3-2 The importance and some necessities of high free floating shares in the market. 79

    13-3-2 Unfavorable effects of low free floating shares 80

    14-3-2 Reasons for the tendency to monopolize shares in stock exchange member companies. 80

    15-3-2 Information asymmetry and market efficiency. 82

    16-3-2 Consequences of information asymmetry in the capital market 84

    4-2 The third speech: Background of the research: 87

    1-4-2 External researches: 87

    2-4-2 Internal researches: 99

    Chapter three: Research implementation method

    1-3 Introduction 108

    2-3 research methods. 108

    3-3 study community and statistical sample. 109

    4-3 research model. 110

    1-4-3 independent variables: 111

    2-4-3 dependent variable 112

    3-4-3 control variables: 113

    5-3 information collection methods. 113

    6-3 information analysis method. 114

    1-6-3 method of testing hypotheses: 114

    1-1-6-3 method of testing the first to fourth hypotheses: 115

    2-1-6-3 method of testing the fifth hypothesis:114

    1-6-3 method of testing hypotheses: 114

    1-1-6-3 method of testing the first to fourth hypotheses: 115

    2-1-6-3 method of testing the fifth hypothesis: 115

    2-6-3 general method of testing hypotheses. 116

    3-7 general steps of data analysis: 117

    Chapter four: data analysis

    1-4 introduction 120

    2-4 descriptive indicators of variables 120

    3-4 research hypothesis testing method. 122

    1-3-4- checking the validity of the model. 123

    4-4 Checking the normality of dependent variables: 124

    4-5 results of the first hypothesis test: 125

    1-5-4 of the first model. 125

    2-5-4 Second model 128

    3-5-4 Third model 130

    4-5-4 Fourth model 133

    5-5-4 Fifth model 135

    6-5-4 General conclusion. 138

    6-4 The results of the second hypothesis test: 138

    1-6-4 The first model. 139

    2-6-4 second model 141

    3-6-4 third model 143

    4-6-4 fourth model 146

    6-6-4 general conclusion. 151

    7-4 The results of the third hypothesis test: 151

    1-7-4 The first model. 152

    2-7-4 second model 154

    4-7-4 fourth model 159

    5-7-4 fifth model 161

    6-7-4 general conclusion. 164

    8-4 The results of the fourth hypothesis test: 164

    9-4 The results of the fifth hypothesis test: 165

    1-9-4 The first model. 165

    2-9-4 second model 168

    3-9-4 third model 170

    4-9-4 fourth model 173

    5-9-4 fifth model 175

    6-9-4 general conclusion. 178

    Chapter Five: Conclusions and Suggestions

    1-5 Introduction 182

    2-5 The results of the hypothesis test 182

    1-2-5 The result of the first hypothesis test: 182

    2-2-5 The result of the second hypothesis test: 184

    3-2-5- The result of the third hypothesis test: 185

    4-2-5 The result of the fourth hypothesis test: 186

    5-2-5- The result of the fifth hypothesis test 186

    3-5 General conclusion of the research. 188

    1-4-5 suggestions based on research hypothesis findings: 188

    2-4-5- suggestions for future research. 189

    5-5- Research limitations. 190

    Appendices

    Appendix A: Research Study Society. 192

    Appendix B: software outputs: 196

    Sources and reference

    Persian sources: 228

    Latin sources: 231

    Latin abstract 240

    Source:

    Persian sources:

    Azar, A. and Mansour Momeni, 1385, "Statistics and its application in management", second volume, Samt Publications.

    Ahmadpour, A. and Amir Tassan, 1385, "The relationship between financial information and the difference in the suggested price of buying and selling shares" Nahma Ekhoni Mofid, No. 57, pages 29 to 48.

    Ahmadpour, A. and Amir Tassan, 2015, "The relationship between risk criteria and the difference in the bid price of buying and selling shares in Tehran Stock Exchange", Accounting and Auditing Review Quarterly, No. 46.

    Islami Bidgoli, G. and Alireza Saranj, 1387, "Portfolio selection using three criteria of average yield and liquidity in Tehran Stock Exchange", Accounting and Auditing Review Quarterly, No. 53, pages 3 to 16.

    Yazdinia, N., and Amir Tassan, 1389, "Share Ownership Dispersion and Liquidity", Accounting and Auditing Review Quarterly, No. 60.

    Bet Shekan, M. and Mehsa Derebeh Kharazi, 1388, "Corporate governance: the degree of respect for shareholders' rights in companies listed on the Tehran Stock Exchange", Baisart Quarterly, No. 42, pages 133 to 153.

    Badari, A., 1387, "Basics and Necessity of Corporate Governance", Proceedings of the Corporate Governance Conference, Tehran Stock Exchange Publications.

    Pourheidari, A. and Associates, 2018, "Investigating the sustainability of the dividend policy of companies listed on the Tehran Stock Exchange, Accounting and Auditing Review Quarterly, No. 1, pages 96 to 111.

    Tehrani, R., 2019, "Financial Management", 7th edition, Tehran, Negah Danesh Publications.

    Jamali, M., 2018," Investigating the relationship between the amount of floating shares and the return of companies on the stock exchange. Bahadar Tehran", Master's Thesis, Shahid Beheshti University. Jamshidi, K., 1381, "Statistics and its application in management", Tehran, Payam Noor University Press.

    Hosseini, S., 1387, "Corporate governance and shareholder support", collection of corporate governance conference articles, Tehran Stock Exchange Publications.

    Khaki, G., 1388, "Research method with an approach to thesis writing", fifth edition, Rekasal Publications.

Explaining the relationship between the ownership structure and the liquidity of the shares of companies listed on the Tehran Stock Exchange
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