Empirical Studies in Financial Accounting

Memorandum of Understanding

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Article Writing Guide

Files

Consultants(2024-2025)

Consultants

Publons

The Effect of Block Trading on Information Asymmetry: Emphasizing the Role of Media Coverage

Document Type : Research Paper

Authors

1 Ph.D. in Accounting, Department of Accounting, Faculty of Administrative and Economic Sciences, University of Mazandaran, Babolsar, Iran

2 Professor, Department of Accounting, Faculty of Administrative and Economic Sciences, University of Mazandaran, Babolsar, Iran

Abstract

Block trades, by transferring a significant volume of shares and revealing company-specific information, can influence the price discovery process and market efficiency, thereby affecting the level of information asymmetry among market participants. Accordingly, the aim of the present study is to examine the impact of block trades on information asymmetry, with an emphasis on the moderating role of media coverage. The statistical population of this study consists of companies listed on the Tehran Stock Exchange during the period 2014 to 2024. Using a systematic exclusion method, data related to 100 companies and a total of 19,227 block trades were selected and analyzed. The generalized method of moments (GMM) was employed to test the research hypotheses. The empirical findings indicate that both the number of block trades and the ratio of block trade volume have a positive and significant impact on information asymmetry. Furthermore, the results of the second part of the study reveal that media coverage negatively moderates the relationship between block trades and information asymmetry. In other words, in companies with broader media coverage, the effect of increasing block trading on information asymmetry is weakened. Overall, the inefficient structure of the Iranian capital market, the high concentration of ownership, and the low level of information transparency have caused block trading, by itself, to fail to effectively disseminate company information and reduce information asymmetry. Nevertheless, expanding media coverage and providing timely information about significant company events—including block trades—can enhance market transparency, promote more accurate reflection of firm-specific information in stock prices, and consequently reduce information asymmetry.

Introduction

Block trading, as one of the significant events in capital markets, has always attracted the attention of financial analysts due to the large volume of shares transferred and its potential to influence prices and liquidity. These transactions can have consequences for market efficiency and information transparency by transferring information and altering the ownership structure of companies. On the other hand, media coverage plays a moderating role in this process by reducing information asymmetry and increasing investor awareness. Accordingly, the present study examines the effect of block trading on information asymmetry, emphasizing the moderating role of media coverage in the Tehran Stock Exchange. The main objective of this research is to analyze the effect of block trading on information asymmetry as one of the outcomes of such transactions and to identify the role of media coverage as a moderating factor. By providing a deeper understanding of how block trading affects the market, this research can assist investors and financial analysts in making more informed decisions. Furthermore, by examining the role of media coverage, it seeks to identify and analyze how public information influences market behavior and investor reactions to block trades. From a theoretical perspective, this study can contribute to the development of existing theories in finance and investor behavior, creating new frameworks for analyzing financial markets. In other words, this research can help establish a new discourse on the relationship between media, large transactions, and market behavior, paving the way for future studies in this field.

Methodology

In terms of purpose, the present study falls under applied research, as its results can serve as a basis for decision-making by managers, policymakers, and capital market investors. Regarding data type and execution process, this research adopts a quantitative approach and is ex-post-facto in nature. The research data include information from all companies listed on the Tehran Stock Exchange between 2014 and 2024 that conducted at least one block trade. After applying systematic elimination, 100 companies with a total of 19,227 block trades were selected as the final sample. Data analysis was performed using descriptive and inferential statistics and the Generalized Method of Moments (GMM). The tools used include Raah-Avard Novin and Excel for extracting and calculating variables, and Stata for hypothesis testing and result analysis. The validity of the GMM method was examined using Arellano & Bond (1991) tests, including the Sargan test for instruments and the m2 test for second-order serial correlation.

Findings

This research investigated the effect of block trading on information asymmetry in the Tehran Stock Exchange, considering the moderating role of media coverage. The main findings indicate that the number of block trades and the ratio of block trading volume have a positive and significant impact on information asymmetry. In other words, block trading is associated with increased information asymmetry. Additionally, media coverage negatively moderates the relationship between block trading and information asymmetry; that is, the positive effect of block trading on information asymmetry is weakened in companies with more extensive media coverage. This means that active news coverage, by reducing information asymmetry, diminishes the positive impact of block trading on information asymmetry. This result is attributed to the inefficient structure of Iran's capital market and the need for media coverage to enhance transparency and better reflect company-specific information in stock prices.

Conclusion

Regarding the level of block trading in Iran and its trends, it can generally be stated that Iran's stock market, unlike other countries, faces challenges due to issues such as inefficiency, high ownership concentration, and lack of transparency in information dissemination. The untimely announcement of positive and negative news and investors' lack of trust in available information prevent the informational content of block trades from being adequately reflected in stock prices. This situation increases access to private information for informed investors, thereby intensifying information asymmetry between informed and uninformed investors. Furthermore, the synergy between normal and block markets helps reduce liquidity shocks and the risk of these stocks. Companies with active block markets have higher liquidity, and their trading volume is greater compared to the normal market. Improved liquidity following block trades contributes to increased market efficiency. In the second part of the research, the conclusion indicates that media coverage has a positive effect on the relationship between block trading and information asymmetry. Companies that have active media coverage and promptly disclose information and objectives of block trades are able to attract new buyers, thereby reducing information asymmetry. The final conclusion is based on the principle that information transparency mechanisms, such as media coverage, play a vital role in optimizing the benefits of block trading for Iran's capital market.
 
 

Keywords

Main Subjects

References
  1. Agarwalla, K., & Pandey, A. (2010). Price impact of block trades and price behavior surrounding block trades in Indian capital market [Working Paper]. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572997
  2. Ahern, K., & Sosyura, D. (2014). Who writes the news? Corporate press releases during merger negotiations. Journal of Finance, 69(1), 241–291. https://doi.org/10.1111/jofi.12060
  3. Ahmed, S., Kumar, S., Gupta, O., & Bamel, N. (2024). CEO media coverage and cash holdings. International Review of Financial Analysis, 91, 103041. https://doi.org/10.1016/j.irfa.2023.103041
  4. Alzahrani, A. A., Gregoriou, A., & Hudson, R. (2013). Can market frictions really explain the price impact asymmetry of block trades? Evidence from the Saudi Stock Market. Emerging Markets Review, 13, 202–209. https://doi.org/10.1016/j.ememar.2012.11.002
  5. Aman, H., & Moriyasu, H. (2022). Effect of corporate disclosure and press media on market liquidity: Evidence from Japan. International Review of Financial Analysis, 82, 102167. https://doi.org/10.1016/j.irfa.2022.102167
  6. Amihud, Y. (2002). Illiquidity and stock returns: cross-section and time series effects. Journal of Financial Markets, 5, 31–56. https://doi.org/10.1016/S1386-4181(01)00024-6
  7. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968
  8. Armanious, A., & Zhao, R. (2024). Stock liquidity effect on leverage: The role of debt security, financial constraint, and risk around the global financial crisis and Covid-19 pandemic. International Review of Financial Analysis, 92, 103041. https://doi.org/10.1016/j.irfa.2023.103041
  9. Baldauf, M., Frei, C., & Mollner, J. (2024). Block trade contracting. Journal of Financial Economics, 160, 103901. https://doi.org/10.1016/j.jfineco.2024.103901
  10. Benouda, S. O., & Mezzez, H. D. (2003). The effects of automation on liquidity, volatility, stock returns and efficiency: Evidence from the Tunisian Stock Market. Review of Middle East Economics and Finance, 1(2), 43–55. https://doi.org/10.1080/1475368032000146933
  11. Bian, J., Wang, J., & Zhang, G. (2020). Chinese block transactions and the market reaction. Journal of Accounting and Economics, 69(1), 101264. https://doi.org/10.1016/j.jacceco.2019.101264
  12. Bonsall, B., Green, J., & Muller, K. (2012). Market uncertainty and the importance of media coverage at earnings announcements. China Economic Review, 23, 181–189. https://doi.org/10.1016/j.chieco.2011.11.002
  13. Bushee, B. J., Core, J. E., Guay, W., & Hamm, S. J. (2010). The role of the business press as an information intermediary. Journal of Accounting Research, 48(1), 1–19. https://doi.org/10.1111/j.1475-679X.2009.00357.x
  14. Chen, J., Hong, H., & Stein, J. (2001). Forecasting crashes: Trading volume, past returns, and conditional skewness in stock prices. Journal of Financial Economics, 61, 345–381. https://doi.org/10.1016/S0304-405X(01)00066-6
  15. Ding, M., Shen, M., & Suardi, S. (2022). Blockholders, tradability and information asymmetry: Evidence from Chinese listed firms. Research in International Business and Finance, 60, 101607. https://doi.org/10.1016/j.ribaf.2021.101607
  16. Easley, D., & O’Hara, M. (1987). Prices, trades size and information in security markets. Journal of Financial Economics, 19, 69–90. https://doi.org/10.1016/0304-405X(87)90029-8
  17. Fama, E. (1965). The behavior of stock-market prices. Journal of Business, 38, 34–105. https://doi.org/10.1086/294743
  18. Frino, A. (2021). Off‑market block trades: New evidence on transparency and information efficiency. Futures Markets, 41(1), 478–492. https://doi.org/10.1002/fut.22212
  19. Frino, A., Jarnecic, E., & Lepone, A. (2007). The determinants of the price impact of block trades: Further evidence. Abacus, 43(1), 94–106. https://doi.org/10.1111/j.1467-6281.2007.00217.x
  20. Gao, X., Xu, W., & Li, D. (2025). Media coverage and managerial investment learning from stock markets: International evidence. Research in International Business and Finance, 76, 102862. https://doi.org/10.1016/j.ribaf.2024.102862
  21. Gemmill, G. (1996). Transparency and liquidity: A study of block trades on the London Stock Exchange under different publication rules. Journal of Finance, 51(5), 1765–1790. https://doi.org/10.1111/j.1540-6261.1996.tb05223.x
  22. Gorman, L., Theo Lynn, T., Monaco, E., Palumbo, R., & Rosati, P. (2021). The effect of media coverage on target firms’ trading activity and liquidity around domestic acquisition announcements: Evidence from UK. The European Journal of Finance, 27(14). https://doi.org/10.1080/1351847X.2021.1922475
  23. Guiso, L., Sapienza, P., & Zingales, L. (2014). The role of social capital in financial development. The American Economic Review, 94(3), 526–556. https://doi.org/10.1257/0002828041464498
  24. Holthausen, R., Leftwich, R., & Mayers, D. (1990). Large-block transactions, the speed of response, and temporary and permanent stock-price effects. Journal of Financial Economics, 26(1), 71–95. https://doi.org/10.1016/0304-405X(90)90015-J
  25. Hu, Y., & Prigent, J. L. (2019). Information asymmetry, cluster trading, and market efficiency: Evidence from the Chinese stock market. Economic Modelling, 80, 11–22. https://doi.org/10.1016/j.econmod.2018.11.001
  26. Huang, C., Huang, H., & Chengho, K. (2024). Media coverage and stock liquidity: Evidence from China. International Review of Economics & Finance, 89, 665–682. https://doi.org/10.1016/j.iref.2023.08.019
  27. Huynh, H., & Dang, T. (2025). The liquidity effect of media coverage: International evidence. Pacific-Basin Finance Journal, 93, 102852. https://doi.org/10.1016/j.pacfin.2024.102852
  28. Ke, D., Li, X., & Zheng, Q. (2025). Role of value signals in information asymmetry markets. Finance Research Letters, 72, 106443. https://doi.org/10.1016/j.frl.2024.106443
  29. Keim, D., & Madhavan, A. (1996). The upstairs market for large-block transactions: Analysis and measurement of price effects. Review of Financial Studies, 9(1), 1–36. https://doi.org/10.1093/rfs/9.1.1
  30. Khlifi, D., & Madhavan, A. (2022). Web-based financial reporting, social media and information asymmetry: the case of Saudi Arabia. Journal of Financial Reporting and Accounting, 20(5), 12 December 2022. https://doi.org/10.1108/JFRA-05-2022-0172
  31. Kita, B., Czerwinski, M., & PresPerepeczo, A. (2017). What drives Shareholder Reaction and Wealth Effect in Block Trades? Evidence from the Warsaw Stock Exchange. Emerging Markets Finance and Trade, 54(7), 1586–1607. https://doi.org/10.1080/1540496X.2017.1364621
  32. Korkeamaki, T., Liljeblom, E., & Pasternack, D. (2017). CEO power and matching leverage preferences. Journal of Corporate Finance, 45(1), 19–30. https://doi.org/10.1016/j.jcorpfin.2017.04.006
  33. Kurek, B. (2017). The information content of equity block trades on the Warsaw Stock Exchange: Conventional and bootstrap approaches. Journal of Forecasting, 35(1), 43–53. https://doi.org/10.1002/for.2365
  34. Lien, D., Hung, P., & Wu, Y. (2023). An intraday analysis of block orders on the Taiwan Stock Exchange. The Quarterly Review of Economics and Finance, 88, 133–147. https://doi.org/10.1016/j.qref.2022.11.006
  35. Limem, M. (2020). Liquidity and volatility around large trades: Evidence from the Tunisian market. Net Journal of Social Sciences, 3(2), 50–63.
  36. Li, X., Qiao, P., & Zhao, L. (2019). CEO media exposure, political connection and Chinese firms’ stock price synchronicity. International Review of Economics and Finance, 63, 61–75. https://doi.org/10.1016/j.iref.2019.04.004
  37. Liu, B., & McConnell, J. J. (2013). The role of the media in corporate governance: Do the media influence managers’ capital allocation decisions? Journal of Financial Economics, 110, 1–17. https://doi.org/10.1016/j.jfineco.2013.04.008
  38. Liu, B., & Zhang, X. (2017). Investor financial literacy and stock price synchronicity: A cross-country study. Review of Contemporary Business Research, 6(2), 26–37.
  39. Lof, M., & Bommel, J. (2023). Asymmetric information and the distribution of trading volume. Journal of Corporate Finance, 82, 102464. https://doi.org/10.1016/j.jcorpfin.2023.102464
  40. Meng, Q., Song, X., Liu, C., & Zeng, H. (2020). The impact of block trades on stock price synchronicity: Evidence from China. International Review of Economics & Finance, 68, 239–253. https://doi.org/10.1016/j.iref.2020.03.005
  41. Nahhal, B. (2023). Effect of Block Trading on the Moroccan Stock Exchange. African Development Finance Journal, 5, 33–52.
  42. Nguyen, B. D. (2015). Is more news good news? media coverage of CEO’s, firm value, and rent extraction. Quarterly Journal of Finance, 5(4), 1–38. https://doi.org/10.1142/S2010139215500149
  43. Ni, Y., Ding, W., Li, D., & Xing, L. (2025). Internal information asymmetry and power distance. Research in International Business and Finance, 76. https://doi.org/10.1016/j.ribaf.2024.102862
  44. OuYangDep, Z., Xu, J., Wei, J., & Liu, Y. (2017). Information Asymmetry and Investor Reaction to Corporate Crisis: Media Reputation as a Stock Market Signal. Journal of Media Economics, 30(2). https://doi.org/10.1080/08997764.2017.1318623
  45. Saar, G. (2001). Price impact asymmetry of block trades: an institutional trading explanation. Review of Financial Studies, 14(4), 1153–1181. https://doi.org/10.1093/rfs/14.4.1153
  46. Sterenczak, S., & Kubiak, J. (2022). Dividend policy and stock liquidity: Lessons from Central and Eastern Europe. Research in International Business and Finance, 62, 101727. https://doi.org/10.1016/j.ribaf.2022.101727
  47. Stoll, H. (1989). Inferring the components of the bid ask spread: Theory and empirical tests. The Journal of Finance, 44(1), 115–134. https://doi.org/10.1111/j.1540-6261.1989.tb02408.x
  48. Sun, Y., & Ibikunle, G. (2017). Informed trading and the price impact of block trades: A high frequency trading analysis. International Review of Financial Analysis, 54, 114–129. https://doi.org/10.1016/j.irfa.2017.09.007
  49. Tetlock, P. C. (2010). Does public financial news resolve asymmetric information? Review of Financial Studies, 23(10), 3520–3557. https://doi.org/10.1093/rfs/hhq052
  50. Venkatesh, P. C., & Chiang, R. (1986). Information asymmetry and the dealer’s bid-ask spread: A case study of earnings and dividend announcements. The Journal of Finance, 41(5), 1089–1102. https://doi.org/10.1111/j.1540-6261.1986.tb04530.x
  51. Wang, Y., Chen, X., & Zhang, Y. (2025). Management tone and corporate information asymmetry in times of pandemic crisis. Journal of International Accounting, Auditing and Taxation, 59, 100708. https://doi.org/10.1016/j.intaccaudtax.2024.100708
  52. Xia, J. (2024). Stealing the show: The negative effects of media coverage on peers’ stock liquidity. Finance Research Letters, 59, 104691. https://doi.org/10.1016/j.frl.2023.104691
  53. Yu, M., Kyung, H., & Tsang, A. (2024). Media coverage and price reactions to earnings news. China Journal of Accounting Research, 17(3), 100379. https://doi.org/10.1016/j.cjar.2024.100379
  54. Fakhari, H., & Rezaei Pitenoei, Y. (2017). Explaining a model for measuring corporate information environment. Financial Accounting Quarterly, 9(33), 121–147. http://qfaj.mobarakeh.iau.ir/article-1-1052-fa.html [In Persian]
  55. Fakhari, H., Faghih, M., & Imani, K. (2021). CEO media exposure and stock price synchronicity: Simultaneous equations system. Journal of Accounting Advances, 13(2), 197–226. https://doi.org/10.22099/jaa.2022.42640.2212 [In Persian]
  56. Meshki, M. (2011). A study of influential factors in stock returns and profitability in the Tehran Stock Exchange (TSE): GMM & GLS models. Journal of Accounting Advances, 3(1), 91–119. https://doi.org/10.22099/jaa.2011.3390 [In Persian]
Empirical Studies in Financial Accounting
Volume 23, Issue 89
April 2026
Pages 1-37
Files
History
  • Receive Date: 06 September 2025
  • Revise Date: 12 November 2025
  • Accept Date: 25 January 2026
Share
How to cite
Statistics