Investigation of the Relationship between Corporate Governance and Financial Management Decisions in Firms Listed in Tehran Stock Exchange Market

Roghayeh Manafi,Ali Zabihi,Amir Mahmoudian

doi:10.5901/mjss.2015.v6n5p88

Abstract

In this research, the relationship between corporate governance and financial management decisions such as earnings management and inappropriate investments is explored. Data of 110 companies listed in Tehran Stock Exchange market from 2007 to 2013 has been used. The method for testing the hypotheses was linear regression. The results showed a negative and meaningful relationship between ownership concentration and CEO duality with earnings management. Institutional ownership has a positive and meaningful relationship with earnings management. Management ownership and earnings management have no meaningful relationship. Also, other results show that management ownership has a negative and meaningful relationship with investment efficiency and other corporate governance mechanisms have no meaningful relationship with investment efficiency. DOI: 10.5901/mjss.2015.v6n5p88

Highlights

Corporate governance in recent years has appealed to many people
According to the findings presented in table 3, possible error rate of null hypothesis based on the lack of meaningful impact of ownership percentage of block shareholders and investment efficiency equals 0.6535 that is bigger than 0.05
Two criteria for financial management decisions were used in this research that consist of profit management and investment efficiency, and in this respect, the study is similar to that of Panayiotis et al (2015)

Summary

Introduction

Corporate governance in recent years has appealed to many people. This is due to the attention paid to economic health of the society and commercial units. Corporate governance system as a system connecting different scientific branches such as accounting, financial management, economy and law and with maintaining balance of social and economic goals with individual and group goals leads to encouragement and enhancement of efficient and optimal use of resources and accountability of companies in regard to other stakeholders in the company. Implementation of corporate governance system can help optimal specialization of resources and improvement of financial information transparency in the market and economic development (John and Senbet, 1998, quoted in Ghaemi and Shahriari, 2009; 114). Accountability is the essence of corporate governance and its proper implementation will facilitate reaching the other three goals (Hasas Yegane,2006;34)

Methods

Results

Conclusion