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Impact of Information Risk on the Liquidity Risk of the Firms Listed on the Tehran Stock Exchange

Author

Listed:
  • Mahmoud Moeinadin

    () (Islamic Azad University)

  • Forough Heirany

    () (Islamic Azad University)

  • Ehsan Khoshnood

    () (Islamic Azad University)

Abstract

Liquidity risk is one of the new topics in the financial management widely considered by the capital market scholars. Most investors, stakeholders and managers are seeking to achieve the satisfactory return and that is why they are confronted with risk and should establish a balance between risk and return. Therefore, it seems essential to investigate the risk and the related factors. The present paper aims to examine the impact of information risk on the liquidity risk. To test the hypotheses, the data of 52 listed firms on the Tehran Stock Exchange during 2006 to 2010 have been collected and analyzed by the multivariate regression. The findings confirm that there is a significant positive relationship between the index of information risk (income smoothing) and liquidity risk.

Suggested Citation

  • Mahmoud Moeinadin & Forough Heirany & Ehsan Khoshnood, 2013. "Impact of Information Risk on the Liquidity Risk of the Firms Listed on the Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 300-307, October.
  • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:4:p:300-307
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    References listed on IDEAS

    as
    1. Iatridis, George, 2010. "International Financial Reporting Standards and the quality of financial statement information," International Review of Financial Analysis, Elsevier, vol. 19(3), pages 193-204, June.
    2. Ng, Jeffrey, 2011. "The effect of information quality on liquidity risk," Journal of Accounting and Economics, Elsevier, vol. 52(2), pages 126-143.
    3. Juan Manuel García Lara & Beatriz García Osma & Araceli Mora, 2005. "The Effect of Earnings Management on the Asymmetric Timeliness of Earnings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3-4), pages 691-726.
    4. Amihud, Yakov, 2002. "Illiquidity and stock returns: cross-section and time-series effects," Journal of Financial Markets, Elsevier, vol. 5(1), pages 31-56, January.
    5. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    6. Amarjit S. Gill & Nahum Biger, 2013. "The impact of corporate governance on working capital management efficiency of American manufacturing firms," Managerial Finance, Emerald Group Publishing, vol. 39(2), pages 116-132, January.
    7. Cornett, Marcia Millon & Marcus, Alan J. & Tehranian, Hassan, 2008. "Corporate governance and pay-for-performance: The impact of earnings management," Journal of Financial Economics, Elsevier, vol. 87(2), pages 357-373, February.
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