Investigation and Explanation of the Relationship between Ownership Structure and Stocks Liquidity of Companies Accepted in Tehran Stock Exchange

Abstract: According to the efficient market theory, one of the features of an efficient and ideal market is the lack of trading costs and high liquidity. Regarding to the importance of liquidity, recognition of the factors affecting it can help us improve it. The goal of this research is to study the relationship between ownership structure and stocks liquidity of the companies accepted in Tehran stock exchange, thus the effect of ownership structure on stocks liquidity is investigated both from ownership type and ownership concentration views. A sample comprised of 74 companies which were members of Tehran stocks exchange in a 5 year period (2005-2009) is selected. Linear regression model with confidence level of 95% and software Excel and SPSS were used to test the assumption and study of relationship between Ownership Structure (independent variable) and liquidity of the stocks (dependent variable). The results show that institutional ownership level, managerial ownership level and ownership concentration level have a reverse (negative) relationship with stocks liquidity and also there is a direct (positive) relationship between corporative ownership level and stocks liquidity.

Keywords:

Stocks Liquidity , Ownership Structure , Ownership Concentration