Saeed Fathi - Associate Professor Faculty of Administrative Sciences and Economics, University of Isfahan
Kaveh Shahraki - PhD Candidate of Financial Management, University of Tehran, Iran Sobhe-Sadegh Institute of Higher Education, Isfahan, Iran
Alireza Ajam - MSC Finance, University of Tehran, Iran

Financial constraints can be an obstacle in making optimal decisions in portfolio management through limiting the access to funds required for investment. Definitely, suitable reaction of investors including planning for having access to adequate liquidity in encountering with financial constraints can be effective on preventing such effects. The main purpose of our study is to investigate reaction of the investment companies considering the liquidity dimension in making portfolio decisions as a strategy to confront financial constraints. Given to this purpose, financial constraints and portfolio liquidity of the investment companies were regarded as the independent and dependent variable respectively. Financial constraints was measured using TOPSIS ranking technique by means of twelve measures of financial constraints. We conclude that financial constraints are led to tendency of the investment companies towards investment in securities with higher liquidity. In other words, financial constraints have increased average portfolio liquidity of these companies.

Financial Constraints, Stock Liquidity, Investment Companies, portfolio management, optimal decision making