Abstract

Free float share is a percentage of total company's capital which is available to stock market transactions. In this study, past information of the sample companies in Tehran Stock Exchange was used to investigate the relationship between percentage of free float shares and share market liquidity, number of buyers, number of transactions and turnover ratio of shares. The aim of this study is to assist investors and stock exchange companies to discover the relation between free float shares and share market liquidity of the stock exchange companies in different amplitudes of free float stock, and make an awareness decision according to the result of this research. For this purpose, the information of about 63 companies in Tehran Stock Exchange has been used. To examine the relationship between the variables, the seasonal variables' data of the model were calculated and used in twenty periods, each consisting of three months from the beginning of 2005  to the end of 2009. Finally, the research result shows a direct relationship between free float shares and the number of buyers, number of transactions and turnover ratio of shares. This shows direct and positive relationship between liquidity and free float shares.