International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

The effect of political affiliation using company size factors and government ownership percentage methods on the relationship between information asymmetry and stock price fluctuations after initial public offerings

Document Type : Original Article

Authors
razieh marvi 1
afsaneh tavangar hamzeh kolaie 1
Farzaneh Heidarpoor 2
1 Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran , Iran
2 Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran
Abstract
With the increase in general public offerings and stock price fluctuations after the initial public offering, there was a need to examine the factors affecting these fluctuations. For this purpose, in this study, to examine the exact dimensions of political affiliation, this variable was measured by two methods, company size factor (TOPSIS) and government ownership percentage. Information asymmetry was calculated using the bid price difference between buying and selling. Also, variables of supplier type (supplier reputation and reputation),institutional ownership, number of shareholders, audit quality and earnings management were used as control variables to examine the impact of other important factors on initial public offering. The results show that political affiliation using the percentage of governmental ownership method affects short-term relationships and political affiliation with the method of firm size factors affects long-term relationships. We find that both methods of political affiliation should be used to accurately examine the dimensions of political dependence and its effect on stock price fluctuations. With a low percentage of governmental ownership, they had high political affiliation and influenced price fluctuations after initial public offerings.The findings also show that with increasing information asymmetry, stock price fluctuations increase after the initial public offering in the long run, but in the short term cannot be effective, which is due to the upward and grammatical effect of the market after the initial public offering. This is also related to the corporate political relations with the government and emphasizes the importance of properly evaluating the political relations using both methods.
Keywords
Political affiliation
information asymmetry
stock price fluctuations
percentage of state ownership
company size factors
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