The Relationship between Earning Management with Bid-Ask Spread of Stock and Trading Volume in Corporations with High Level of Non-Institutional Ownership

The relationship between earning management and bid-ask spread of stock, and also the relationship of trading volume in corporations with noninstitutional ownership during the years 2008 to 2012 were studied in this paper. The research samples include 48 corporations, in which the noninstitutional ownership stand at a high level. Unlike the recent researches, the new indicator for measuring the earning management has been used in this study. This study was descriptive and correlation and assumptions of multiple regression panel data were analyzed. The results show that there is a positive and significant relationship between earning management and bid-ask spread of stock. The bid-ask spread of stock is considered as liquidity criterion of stock and there is an inverse relationship between this criterion and the liquidity of stock. Thus, there is a negative and significant relationship between earning management and stock liquidity. Besides, the results indicate that there is also a negative and significant relationship between earning management and trading volume. Generally, there is an inverse relationship between stock market liquidity and the earning management of the corporations with high non-institutional ownership.