African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4137

Full Length Research Paper

The relationship between the percentages of free float shares and liquidity of shares in the companies accepted in Tehran Stock Exchange

Emad Rezaei
  • Emad Rezaei
  • Department of Accounting, Malayer Branch, Islamic Azad University, Malayer, Iran.
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Atefeh Tahernia
  • Atefeh Tahernia
  • Department of Mathematics, Malayer Branch, Islamic Azad University, Malayer, Iran.
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  •  Published: 07 October 2013

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. 

Key words: Percentage of free float shares, the number of buyers, shares turnover ratio, the number of transactions.