The Effect of Ownership Structure on The Relationship Between Liquidity and Company Value

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran

2 Ph.D. Student of Accounting, University of Mazandaran, Babolsar, Iran.

3 MSc. of Accounting, KAR Higher Education Institute, Department of Management and Accounting, Qazvin, Iran.

4 MSc. of Accounting, Farabi Campus of University of Tehran, Qom, Iran

Abstract

Stock liquidity is one of the main factors that affect firm value, which can be due to the behavior of major shareholders and the composition of the ownership structure of the company. this is the main motivation for this study. The research hypotheses were tested based on a statistical sample consisting of 125 companies during a 7-year period from 2014 to 2020 using multiple regression models. The results of hypothesis testing showed that there is a significant nonlinear (U-shaped) relationship between stock liquidity and corporate value. In other words, at the basic levels of liquidity (before the threshold point of 2.194), there is a negative and significant relationship between liquidity and the value of companies. However, at levels above the baseline level of liquidity, there is a positive and significant relationship between liquidity and the value of companies. Also, stocks with higher institutional owners, higher real owners, and shares of the largest shareholder should have a relatively lower level of liquidity (before the threshold point of 3.176 for institutional owners, 3.662 for real owners, and 2.988 for the largest shareholder) to trade to increase the value of the company.

Keywords

Main Subjects

References

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History

  • Receive Date: 27 November 2021
  • Revise Date: 16 January 2022
  • Accept Date: 26 June 2022

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