Abstract

Millions of shares traded daily on the stock market. Factors influencing the number of transactions that will be remembered as the Trading Volume has been of interest to investors and analysts. The main source of information used for this purpose, is the company’s financial indicators. The indicators include profitability ratios, liquidity ratios, debt ratios, efficiency ratios and stock market ratios.

The purpose of this study was to evaluate the effectiveness of the financial indicators on trading volume of 67 companies listed in Tehran Stock Exchange during the period 3/21/2010 to 3/20/2014. For this purpose, using Hierarchical Multiple Regression to examine each hypothesis, the relationship between the ratio and trading volume with control variables (year, industry, inflation and exchange rates) examined and on the basis of significance level was evaluated. Then on the basis of  factor in each group based on assumptions, most prominent were identified and selected on the end of an overall regression was performed.

The results indicate that liquidity and performance indicators are significantly related to trading volume. Also the results indicate that the most significant proportion of the working capital of a company that has the greatest impact on trading volume. In addition, the year, industry and exchange rates have a significant effect on the control variables, had a significant effect in the case of this study, then effect of them was controlled and eliminated.

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