Corporate Governance, Profit Management, and Their influence on Stock Liquidity

This article examines the different mechanisms of corporate governance and profit management on stock liquidity at the Tehran Stock Exchange companies in the period of 1997-2007, using the data of 136 non-financial companies and the Tehran Stock Exchange Insurance. To pursue this goal, the Herfindahl-Hirschman indices and the ratio of the shares of the five major shareholders to the total shares of the company for concentrating ownership, and profit management based on optional accruals, real profit management as an alternative variable to profit management, and in addition three AmiHood criteria, trading volume and traded stock ratio have been used for the company's liquidity. The results show that the concentration of shareholders using both Herfindahl-Hirschman indices and the ratio of shares of five major shareholders on the total shares of the company has a negative and significant impact on stock liquidity. The results can be considered as a suitable guide for government policy makers, corporate finance managers, capital market analysts, investors and other stakeholders.

Corporate Governance, Profit Management, and Their influence on Stock Liquidity Keywords:

Concentration of Ownership , Real Profit Management , Profit Management of Optional Accruals , Liquidity