The Interaction between Free Float Rate and Financial Information Manipulation: The Case Study of BIST 30

Abstract

This study investigates the relationship between firms' free float rate (FFR) and financial information manipulation (FIM) using annual data from 2010 to 2023 for companies listed in the BIST 30 index, excluding those in the banking sector. Panel causality analysis reveals a bidirectional causality between free float ratios and financial manipulation. The findings suggest that transparency, auditing, and corporate governance practices play a critical role in curbing manipulation. However, under market pressures and heightened investor expectations, firms may also resort to manipulative practices. This dual effect highlights the complex interaction between governance mechanisms and financial reporting behavior. Future research should focus on specific sectors or cases to better understand this dynamic and offer a more detailed analysis of how varying market conditions and governance practices influence this relationship.