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Stock liquidity, future investment and future investment efficiency in an emerging economy: investigating the moderator role of financial constraints

Arash Arianpoor (Department of Accounting, Attar Institute of Higher Education, Mashhad, Iran)
Nahid Mohammadbeikzade (Department of Accounting, Attar Institute of Higher Education, Mashhad, Iran)

Journal of Islamic Accounting and Business Research

ISSN: 1759-0817

Article publication date: 19 October 2023

139

Abstract

Purpose

This study aims to investigate the relationship between stock liquidity, future investment, future investment efficiency and the moderating effect of financial constraints.

Design/methodology/approach

To serve the purpose of the study, the data of 178 companies listed on the Tehran Stock Exchange in 2012–2017 were examined. In this research, two Amihud liquidity and stock trading turnover measures were taken for the liquidity. Due to variance heterogeneity, the FGLS test was used. Moreover, a modified multiple regression analysis was used to investigate the moderating role of financial constraints.

Findings

The results showed a significant positive relationship between the firm stock liquidity in the current year and the next year investment; the firm stock liquidity (based on the stock trading turnover) in the current year and the next two years’ investment; the firm stock liquidity (based on the trading turnover index) in the current year and the next year investment efficiency; and the firm stock liquidity (based on the stock trading turnover) in the current year and the next two years’ investment efficiency. Moreover, financial constraints negatively moderated the relationship of firm stock liquidity (based on trading turnover index) in the current year and investment in the next year; investment in the next two years; investment efficiency in the next year; and investment efficiency in the next two years.

Originality/value

Given the importance of investment and investment efficiency in emerging markets especially in Asian emerging markets, and because the predicted impacts through financing constraints are usually unclear, this paper attempted to fill the existing gap and be innovative in this regard.

Keywords

Acknowledgements

The authors are especially grateful to the editor and the anonymous reviewers for their valuable insights and constructive comments.

Funding: This research received no external funding.

Citation

Arianpoor, A. and Mohammadbeikzade, N. (2023), "Stock liquidity, future investment and future investment efficiency in an emerging economy: investigating the moderator role of financial constraints", Journal of Islamic Accounting and Business Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIABR-07-2022-0177

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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