Offering Stock and private investment in Iran economy (concentrated on stock price)

Abstract

The goal of this study is to investigate the effect of stock offering (concentrated on stock price) on private investment during 1989-2012. The differentiation of the present study to other studies is using the total stock price index in exchange to assess stock offering and the volume of transactions in exchange. To do this, we have used self explanatory econometrics model with widespread intervals (ADRL) to evaluate the relations among variables. The results showed that stock offering has a negative significant effect on the private investment which is inconsistent with theoretical issues, as the stock price (value) increases, high liquidity lead to inappropriate allocation and sources loss in negative NPV projects, capital waste and ultimately decrease private enterprising. Moreover, a large volume of transactions in exchange market relate to firms and enterprising funds which are not secured through public savings , directly monitor stock activities, although they appear private, but investigating in their nature shows that they are public enterprises. Though, retail or public stockholders are much, but have low transactions volume and fewer maneuvers. Therefore, exclusiveness and publicity of stock firms, limited activity in exchange market as well are regarded other reasons of this variable negative effect on the private investment.