Financial Market Transparency and Its Impact on Market Efficiency and Business Development
Keywords:
business development, development of financial markets , transparency in financial marketsAbstract
Objective: This study aims to examine the effect of financial market transparency on firms’ business development, emphasizing the mediating role of market efficiency in Iran’s capital market.
Methodology: The study adopts a quantitative, analytical–inferential design based on panel data methodology. The sample consists of firms listed on the Tehran Stock Exchange over a multi-year period. Data were collected from audited financial statements and trading records. To control for unobserved firm-specific heterogeneity, fixed-effects panel regression models were employed following the Hausman test. Stationarity tests and other econometric diagnostics were conducted to ensure the robustness and validity of the estimations.
Findings: The results indicate that financial market transparency has a positive and statistically significant effect on market efficiency (β=0.37, t=4.98, p<0.001). In addition, both financial market transparency (β=0.21, t=3.04, p<0.01) and market efficiency (β=0.29, t=4.17, p<0.001) exert a direct and significant positive influence on business development. Mediation analysis confirms that market efficiency plays a partial mediating role in the relationship between financial market transparency and business development, as the coefficient of transparency decreases yet remains significant after including the mediator.
Conclusion: Financial market transparency should be regarded not merely as a regulatory requirement but as a critical mechanism for enhancing market efficiency and fostering sustainable business development in emerging capital markets such as Iran.
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Copyright (c) 2025 Eskandar Azhdari, Abbas Ramezanzadeh Zaidi (Author)
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