The Relationship between Transparency and Company's Liquidity and Market's Liquidity and Market's Returns

Abstract

Transparency, meant to provide complete information in a simple form and timely for decision making and operational by users, is an important factor, and also to Increase all three, profitability, liquidity, and assets efficiency is very Influence and is arguable. The main objective of this study is to find an answer for the presence or absence of a relationship between information transparency with the firm’s liquidity, market’s liquidity and market’s returns; according to volatility of liquidity, more frequent of extreme illiquidity, and co-variability of liquidity, thus the Hypotheses were proposed based on the basic assumption that: “There are Relation between transparency and liquidity of the companies, liquidity of market and market returns” and for this purpose is discussed the data of 182 companies listed in Tehran Stock Exchange from 2007 until 2011 (from 2007 to 2011 AD). Results of this research suggest that: there is no relation between levels of transparency with firm’s volatility of liquidity; and there are no relation between level of transparency with firm’s co-variability of liquidity level and market’s returns. There are negative and significant relationship between level of transparency with firm’s more frequent of extreme illiquidity; and there are Positive and significant relationship between transparency level of firm’s co-variability of liquidity level and market’s liquidity.