Effect of Shareholders’ Structure on Stock Liquidity with an Emphasis on the Role of Financial Constraints

The main purpose of this study is to investigate the effect of shareholders’ structure on stock liquidity with an emphasis on the role of financial constraints in companies listed on the Tehran Stock Exchange. The research hypotheses were tested based on a statistical sample consisting of 125 companies during a 7-year period from 1393 to 1399 (2014-2021) using multivariate regression models. In order to measure the structure of the shareholders, the percentage of real ownership, institutional ownership, and the percentage of free-floating shares were used. To calculate liquidity, the relative gap between stock buying and selling prices, and to calculate the financial constraint, the financial constraint model based on operational cash flow presented by Pour Alireza et al. (2017) for measuring financial constraint in Iran has been used. The results of the study show that there is a non-linear relationship between shareholders’ structure and liquidity. Thus, there is a significant non-linear (inverse U) relationship between real and institutional ownership and the difference between the bid and ask prices of corporate stocks. Also, there is a significant non-linear (U-shaped) relationship between free-float stocks and the difference between the bid and ask prices of corporate stocks. The results also show that constraints on corporate financing have a nonlinear (U-shaped) effect on the relationship between real ownership and the difference between the bid and ask prices of corporate stocks, and a significant nonlinear (inverse U) effect on the relationship between free float and the difference between the bid and ask prices of corporate stocks. However, constraints do not have a significant moderating effect on the relationship between institutional ownership and the difference between the bid and ask prices of corporate stocks.