Accounting and Auditing Studies

Accounting and Auditing Studies

Investigating the impact of stock liquidity on managerial empire building: the role of regulatory mechanisms and governance power

Articles in Press

Document Type : Original Article

Authors
Mahdi Alibalai
Mohsen Rahimi Dastjerdi
Rahman Saedi
Department of Accounting, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
10.22034/iaas.2025.454013.1607
Abstract
Managers through their decisions to achieve goals such as gaining power, prestige and position, receiving excessive rewards; They opportunistically grow their companies beyond the desired size. On the other hand, the high liquidity of stocks can help reduce financial constraints and force managers to invest inefficiently to build an empire. Strong corporate governance is a mechanism to solve agency problems, while Increasing the quality and quantity of reports can have an impact on this matter. The main purpose of this research is to investigate the effect of stock liquidity on the construction of a managerial empire according to the role of regulatory mechanisms and governance power. The statistical population of this research is the companies accepted in the Tehran Stock Exchange and its statistical sample includes the data of 105 companies for the 9-year period of 1393-1401. The sampling method was the systematic elimination method. In this research, multiple regression models were used to analyze the data and test the hypotheses. The results of the research showed that the liquidity of stocks has a positive effect on the construction of managerial empire and the regulatory mechanisms moderate this effect. It was also found that the power of governance weakens the effect of stock liquidity on the construction of a managerial empire.
Keywords
Stock liquidity
managerial empire building
regulatory mechanisms
sovereign power

Subjects

Accounting and Auditing Studies

Articles in Press, Accepted Manuscript
Available Online from 20 May 2025