The impacts of free float on liquidity and stock price: Case study of 100 listed firms on Ho Chi Minh stock exchange

Abstract

This paper investigates the effect of the free float ratio (FFR) on stock return, price volatility, and trading activity in the Ho Chi Minh Stock Exchange (HOSE). In this study, information was collected about 100 companies listed in HOSE (VN100) over the period 2015-2016. The relationships between free float ratio and average daily closing price, price volatility, and average daily trading activity are measured by regression models. The results from the analysis indicate that free float ratio and price volatility are not significantly correlated. On the other hand, trade activity and average price return are significantly correlated with free float ratio. Key words: percentage of free float, stock price, price volatility, and trade activity.