Iranian Journal of Finance

The Role of Stock Market Development in Enhancing Financial Concepts

Document Type : Original Article

Authors

Mostafa Hashemi Tilehnouei 1
Javad Nikkar 2
Mehri Kamandi 3

1 Assistant Prof., Department of Management, ET.C., Islamic Azad University, Tehran, Iran

2 Assistant Prof., Department of Accounting, ET.C., Islamic Azad University, Tehran, Iran.

3 Master of Accounting, Department of Accounting, ET.C., Islamic Azad University, Tehran, Iran.

10.30699/ijf.2026.566573.1565
Abstract
This study examines the impact of stock market development on key corporate financial outcomes among firms listed on the Tehran Stock Exchange, with a comparative analysis across two distinct capital market periods. The study tests five hypotheses using panel data from 140 listed companies over the period 2011–2024. To capture structural changes in the market, the sample period is divided into two sub-periods: 2011–2017 (first period) and 2018–2024 (second period). The empirical analysis is conducted using panel regression models with firm fixed effects. The results indicate that stock market development has a stronger and more pronounced impact during the second period (2018–2024). Specifically, investment efficiency and corporate financial health improve more substantially in the second period compared to the first. In addition, the cost of capital and reliance on debt financing decline more significantly in the second period. The findings also show a structural shift in corporate investment behavior: under greater stock market development, firms tend to move toward financial investment strategies and away from non-financial asset investment in the later period. This study contributes to the literature by providing comparative evidence on how structural changes and transparency-enhancing reforms in the stock market influence corporate financial outcomes over time. By distinguishing between two development phases of the capital market, the study offers new insights into the effectiveness of market reforms and their implications for corporate financial behavior.

Keywords

Stock Market Development
Transparency in Financial Reporting
Economic Development
Supervisory Mechanisms
Disclosure Quality
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Iranian Journal of Finance
Volume 10, Issue 2
2026
Pages 32-61

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