Evaluating the Effect of Stock Liquidity & Limitation of Orders on Future Fluctuations Case Study: Petrochemical Companies Admitted in Tehran Stock Exchange

Abstract

Fluctuations in stock prices are commonly observed in all stock exchanges and are considered a natural aspect of market dynamics. These fluctuations are influenced by a variety of factors both within and outside of organizations. When these factors are identified, shareholders can make informed decisions by evaluating their own holdings as well as those of others in the market. This enables them to take appropriate actions such as maintaining, selling, or replacing their shares as needed. This research examines the impact of stock liquidity and order restrictions on the future fluctuations of petrochemical companies listed on the Tehran Stock Exchange over a five-year period. Utilizing a panel data approach, monthly time series data obtained from the Stock Exchange is analyzed. The hypotheses are tested using panel data econometric methods and the EViews7 software. The findings reveal a significant relationship between relative liquidity and future stock price fluctuations, as well as a significant relationship between sales order limits and future fluctuations. Consequently, it is recommended that regulatory authorities implement effective policies regarding stock liquidity and sales order limits to manage and mitigate sudden fluctuations in the Stock Exchange