Political economy of corporate governance: the case of Iran

Abstract

This study enriches the literature concerning the political economy of corporate governance (CG) and explains the characteristics of CG in Iran based upon the political economy model. Hence, we modify and extend the conceptual framework of the political economy of CG based on new evidence from Iran. In addition, to answer the research questions, this framework highlights the political connections of interest groups and political interventions as the principal issues relating to Iranian CG mechanisms. Moreover, it can be concluded that specific CG characteristics of the political economy in Iran, have a negative impact on the quality of CG, including state ownership, state board, state CEO, concentrated ownership, board and CEO alignment with controlling shareholders. The interpretative and predictive power of the conceptual framework of political economy of CG is promoted in this study at both the firm and macro levels. In addition, the framework can provide a basis to study CG mechanisms in countries with a governmental economy.