Review the relationship between firms size with return and risk firms accepted in Tehran-Iran stock exchange

Abstract

The aim of the present research is to study and analyze the relationship between firm sixe and return rate and risk in firms accepted in Tehran Stock Exchange. The question posed is that what effect does the firm size has on return and risk. Thus, we will deal with studying the relationship between risk and return and firm size in bourse companies to identify whether big companies are more appropriate for investment or the small ones? Since market value of the firm's stocks was considered as the firm size (independent variable in the present research, the research results will show whether purchasing the stocks of companies with more market values will result in more earnings for the investors or purchasing stocks of companies with low market values? Additionally the risk of these two groups of companies will be investigated. In the present research we considered some criteria to select our sample and chose 84 bourse companies during the time period between 2007 and 2011 and studied the relationships between the variables mentioned by using the statistical software E-Views. According to the results the existence of a linear relationship between firm size and return was approved for the years 2008 and 2009 and the existence of a linear relationship between firm size and systematic risk index was approved for the years 2008, 2009, and 2011. Meanwhile, in all the cases above, the relationship between firm size and return and systematic risk index was direct and the regression line slope was estimated to be positive.