Investigation of the relationship between conservatism in financial reporting and stock liquidity of the listed companies on Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Professor, Faculty of Economic, Management and Social Sciences, Shiraz University, Shiraz, Iran

2 MSc. in Accounting, Faculty of Economic, Management and Social Sciences, Shiraz University, Shiraz, Iran

Abstract

The current research aims to study the relationship between the conservatism in financial reporting and stock liquidity of the listed companies on Tehran Stock Exchange (TSE) market. For this purpose, this research investigated 106 listed companies on TSE during 2001-2012 and exerted panel regression models with fixed effects to test the hypotheses. The findings indicate that there is a positive relationship between conservatism and direct criteria of the liquidity such as the volume of the transactions, ratio depth, and a negative relationship between conservatism and inverse criteria of the liquidity such as absolute and ratio spreads between bids and ask prices for the stocks. In addition, the results show that the effect of the conservatism on the transactional criteria, especially on the number of the transactional days, has been more than the informational indexes based on the adjusted R-square.

Keywords

References

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