Accounting Comparability, Stock Liquidity, and Firm Value

The main purpose of this study is to test the impact of accounting comparability on stock liquidity and firm value. This study uses panel data analysis to test hypotheses for a sample of ۱۰۸ firms listed on the Tehran Stock Exchange during ۲۰۱۶-۲۰۲۰. Our empirical results show a positive relationship between accounting comparability with free float ratio and stock turnover ratio. But there is no significant relationship between accounting comparability and the Amihud ratio. The interpretation of this result can be attributed to how the Amihud ratio is calculated. Based on the constraints imposed on the Iranian capital market, the daily return in calculating the Amihud ratio has a certain fluctuation range and is not able to reflect all the dimensions of the market. In addition, our results document a positive relation between accounting comparability and firm value. Finally, accounting comparability does not moderate the association between stock liquidity and firm value. In addition, the cost of capital (CoC) intensifies the relationship between accounting comparability and firm value. We interpret these results as accounting comparability improves transparency, and reduces information asymmetry. These results also show that the capital market is incomplete.

Keywords:

Accounting Comparability , Stock liquidity , Firm Value , Cost of capital