Investigating the Effects of Corporate Governance System Quality on Company Performance

Abstract

In general, corporate governance (CG) includes legal, cultural, and institutional arrangements that will
determine companies’ future direction and performance. The current research mainly tries to evaluate the
impact of corporate governance system quality on the performance of the companies listed in Tehran
Stock Exchange. In the current research, the quality of corporate governance system is considered as the
independent variable to be able to examine its impact on the dependent variables including return on
assets (ROA), return on equity (ROE), economic value added (EVA), and market value added (MVA).
The research statistical population is composed of all of the companies listed in Tehran Stock Exchange
within 2008 to 2014, and the sample size based on screening method and after the removal of outlier
observations was obtained to be 112 firms. In the research, integrated data and also panel data with fixed
and random effects were used. The results from the companies’ data analysis using multivariate
regression at the confidence level of 95% shows that the quality of corporate governance system has a
direct and positive impact on the dependent variables including ROA, ROE, EVA, and MVA