The Effect of Liquidity Management on Reducing the Stock Price Crash Risk (Case Study: Companies Listed in Tehran Stock Exchange)
Journal Title: International Research Journal of Applied and Basic Sciences - Year 2013, Vol 7, Issue 6
Abstract
Present study examines the effect of Liquidity management on reducing the risk of decrease in stock prices. Decrease in stock prices can be due to weak and inefficient strategies taken by managers. One of the most important strategies taken by management is Liquidity management. In case of inadequate policies to manage the company's Liquidity, finance manager could decrease current assets and increase current liabilities. Adopting this approach can lead the company to insolvency and bankruptcy due to poor liquidity position. Delay in payment of company’s debts can affect the credit rating of company and diversely affect company’s reputation and consequently weaken performance which can finally lead to decrease in stock prices. Considering the importance of Liquidity management in performance of firms, this research aims to answer the question whether Liquidity management can affect the stock prices or not. To measure the Liquidity we made use of Gitman’s cash conversion cycle (1974) and Chen’s negative factor stock return skewness model (2001) to measure the stock prices falls in 59 listed companies in Tehran stock exchange between 1998 and 2011. This study provides strong evidence that Liquidity management is likely to significantly reduce the risk of falling stock prices.
Authors and Affiliations
Mohamad Abdi| email: abdi.khebre@gmail.com, Maqsood Hosseini
Keywords
Related Articles
- EP ID EP6390
- DOI -
- Views 221
- Downloads 7
Entrepreneurship from the perspective of university graduates (Case study: graduates of science and knowledge of the city of Darrehshahr)
Entrepreneurship is considered from various aspects, one of which concerns, after the success of the psychological and personal characteristics. The present study was conducted to investigate the attitudes of university...
The Investigation of UptakeTrace Elements by Aloe Vera Plant
Soil contamination and accumulation of tracers into agricultural products in the industrial regions is one of the most important environmental issues that threaten the life of human, animals and plants. Due to using wate...
Effectiveness of educating auricular skills on operation of problem solving skills of girl students with mathematical problems
Purpose: its purpose is to study effectiveness of educating auricular skills on operation of problem solving skills of girl students with mathematical problems. Methodology: its method is quasi test research and social s...
Investigation of Correlation between Organizational Structures and Effectiveness in Zahedan University of Medical Sciences
The aim of this work is investigating problems in organizational structure of Zahedan University of Medical Sciences and its effectiveness on the organization. To this end, a sample in size 285 was selected by stratified...
Application of Random PWM Technique for Reducing EMI
A pulsewidth modulation (PWM)-controlled active filter generates harmonics at the switching frequency and its multiples in the RF range, and the concentrated power spectrum may produce electromagnetic interference (EMI)...