Free Float Supercharging and its Impact on Company Performance

Document Type : Original Article

Authors

1 PhD Candidate, Department of Accounting, Faculty of Economics and Accounting, Islamic Azad University, Tehran Central Branch, Iran

2 Assistant Professor, Department of Accounting, Faculty of Economics and Accounting, Islamic Azad University, Tehran Central Branch, Iran

3 Assistant Professor, Department of Accounting, Faculty of Economics and Accounting, Islamic Azad University, Tehran Central Branch, Iran.

Abstract

One of the mechanisms which can direct investors to invest more efficiently to get more returns is the amount of free float. This type of shares is a percentage of the company's capital that is available for trading or can be traded without any restrictions. The difference in the amount of free float in various countries, industries, sectors and companies at different times show the fact that the amount of free float is affected by different factors and variables. This has led many researchers to investigate factors which can lead to find its effective amount. The main concern of analysts is to estimate the theoretical value of stocks and asset prices with a comparable tool such as free float. Of course, from the viewpoint of market participants, the relationship of different levels of free float shares to key measures and tools such as company performance is not yet clear. Therefore, this study aims to investigate stock supercharging by increasing the percentage of free float and its effect on the performance of companies. In this study, 128 companies listed on the Tehran Stock Exchange were selected, which were active in the fiscal years 2009 to 1397. After Panel Data Method with random effects was used for the research regression model, the results indicate a positive and significant effect of free float on the performance of companies.

Keywords

References

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