Enterprises Financial Growth in Iran's Capital Market: Trends and Strategic Insights

The capital market in Iran is one of the leading institutional arrangements for the allocation of financial resources and investment opportunities. It greatly contributes to the development of corporate finances to enhance the productive capacity of the country. Thus, it is of great significance to the financial development of the economy. In the case of an efficient market, the speed of information reflection on the stock price is at a high level. Many of the participants in this market receive information and quickly evaluate its contents before taking buy or sell positions. The speed at which their responses occur enables the quick and correct incorporation of available information into market prices. Insufficient transparency within a corporation's financial disclosures, therefore, relates to an increased potential for financial stagnation, where this lack of financial transparency serves as the main factor for a slower reaction in stock prices. This empirical research has been conducted with the main aim of assessing the effects of the speed of stock price adjustment on the financial development of companies listed in the Iranian capital market. In this regard, the empirical procedures developed by Hau and Moskowitz (۲۰۰۵) have been employed to measure the speed of stock price adjustment. In addition, the financial development of firms was assessed using three proxies: stock market trading volume, the size of the stock market, and the financial development index. The statistical population includes all the entities listed in the Tehran Stock Exchange (TSE). The sample consists of ۱,۰۳۶ firm-year observations for the years ۲۰۱۴ to ۲۰۲۲.This study uses a correlational and casual design and is classified as ex post facto, whereby hypotheses are tested using correlation and regression analysis. The findings obtained allow seeing that the speed of stock price adjustment-the stock price informational efficiency index-positively influences both the financial development index measured by the trading volume in the stock market against GDP and the financial development index measured by stock market size against GDP. Considering the importance of the market informational efficiency for the establishment of a transparent informational environment that allows making optimal decisions, an appropriate correspondence of actions by experts and managers brings considerable advantages to the (TSE). The findings also suggest that company managers and other relevant stakeholders must try to enhance the quality of financial reporting in order to ultimately help in promoting a transparent informational environment in Iran's capital market for financial development of firms.

کلیدواژه ها:

The speed of stock price adjustment ، Market informational efficiency ، financial development ، Iran's capital market.