Free Float and P/E Ratio at the Tehran Stock

To reach their goal of getting desirable return on their investment the investors require that information to be clear، come in appropriate time، and to be homogeneous. One of the issues that has been raised recently in the selection and purchase of shares is the amount of free float of the companies. On the other hand، P/E ratio is accounted as one of the tools for making investment decision for investors in evaluating the shares of the companies. The purpose of this research is measuring the relationship between the amount of free float and price to earnings ratio of the companies. The research utilizes the data of the companies listed at the Tehran Stock Exchange for the period of 2004-2010. On the other hand، in addition to answering the above question، the paper attempts to test the relation in various industries as well. Making use of elimination sampling، the related data were collected from 79 companies across various industries. The survey research hypotheses using Pearson correlation test and regression analysis indicate the positive relationship to exist between these two variables. Also، in most industries this test has been positive and significant.