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The Effects of Free Float Ratios on Market Performance: An Empirical Study on the Istanbul Stock Exchange

Faruk Bostanci and Saim Kilic

Istanbul Stock Exchange Review, 2010, vol. 12, issue 45, 1-14

Abstract: This study aims to examine the effects of free float ratios (i.e. the quantity of shares available to public) on market performance of stocks in Turkey. The data contains 199 listed firms on Istanbul Stock Exchange for the year 2007. The relationship between free float ratio and the dependent variables average daily closing price, price volatility and average daily trading activity is measured by regression models. Findings suggest that the market rewards higher floating ratio, that is, average daily closing price and trading activity is significantly higher for stocks with higher free float ratio. However, the price volatility or risk of a stock increases with free float ratio. Finally, the effect of free float ratio on these variables is measured by controlling size of firms through a multi variable regression model. According to regression results effects of floating ratio do not increase or decrease as the firm size increase or decrease.

Keywords: Free float ratio; market performance; ownership structure; ISE (search for similar items in EconPapers)
JEL-codes: G14 G35 (search for similar items in EconPapers)
Date: 2010
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