Investigation of Corporate Governance in companies on Tehran Stock Exchange

Abstract

One of the most fundamental functions of deployment of corporate governance in companies is trying to improve performance and increase value for stockholders. Increased firm value could finally lead to increase in wealth of stockholders. Therefore, it is natural that stockholders tend to improve performance and increase firm value. If the corporate governance mechanisms are unable to play this role in companies, they have not required efficiency in practice and have not the ability to improve performance of company. The main objective of this study is to investigate the correlation between corporate governance and performance of public companies on Tehran Stock Exchange. For this purpose, the correlation between mechanisms of corporate governance and criteria including return on asset (ROA) performance, return on equity and Tobin's Q ratio are measured. Studied sample consists of 47 companies in 9-year period of 2007-2015 forming total of 423 observations. Analysis of research hypotheses shows that in general, there is significant correlation only between institutional ownership and performance criteria.