Reviewing the Relationship between Institutional Ownership and Outside Members of Board of Directors, and Liquidity of Common Stocks of Companies Quoted in Tehran Stock Exchange

Esmaeel Farzaneh Kargar () and Eesa Zarei

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2014, vol. 4, issue 2, 218-231

Abstract: Since some investors may need their investing financial sources immediately, in every financial market, the level of assets liquidity is considered as a basic issue in investment. By considering the effect of liquidity in discovering the assets` prices, distributing the financial risk, decreasing the costs of transactions, and determining the factors which affect it, is very important. This research reviews the effect of outside members of board of directors and institutional ownership, as the most important criteria of corporate governance, on liquidity of stocks. To do so, a number of 69 companies were chosen from Tehran stock exchange through screening method, in 2008-2011 time periods. In this research 7 different standards were defined for liquidity. We reached to evidences that show the number of outside members of board of directors has no effect on liquidity and institutional ownership is not that effective on liquidity. The results indicate that, since among 7 standards of liquidity, 4 standards have a negative and significant relationship with institutional ownership, we can say that: there is a negative and significant relationship between institutional ownership and liquidity of stocks.

Keywords: Liquidity; outside members; institutional ownership; corporate governance; Tehran stock exchange (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:4:y:2014:i:2:p:218-231

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