Abstract
In this research, relationship between corporate governance and financial performance is investigated. Data from 110 companies listed in Tehran stock exchange market from 2007 to 2013 has been used in analysis. Testing the hypotheses was carried out through linear regression. Results revealed that managerial ownership has a negative and significant relationship with financial performance while institutional ownership has a positive relationship with financial performance. Major shareholders have negative relationship with financial performance. Moreover, there is a negative and significant correlation between duality of CEO’s tasks and firms’ financial performance. DOI: 10.5901/mjss.2015.v6n5p56
Highlights
One of the principal factors of improvement of economical efficiency is business steering system that involves a collection of relationships between CEO, board of directors, shareholders and other stakeholders
Variables and Research Model Independent Variable Corporate governance that is measured by the following criteria: o The percentage of company shares that are held by board of directors. o The percentage of company shares that are held by institutional shareholders. o The number of block shareholders whose ownership percentage is more than 5 percent of company shares. o Duality of CEO tasks; that is when CEO is the same as head of board of directors
According to the results presented in table 2, possibility error level related to null hypothesis is based on the lack of significant impact of ownership concentration on financial performance is 0.4168 that is bigger than 0.05
Summary
One of the principal factors of improvement of economical efficiency is business steering system (corporate governance) that involves a collection of relationships between CEO, board of directors, shareholders and other stakeholders. Business steering system provides a system through which objectives of business are set and tools for reaching goals and monitoring performance are determined. Today one of the most important financial issues of firms lies in measuring their performance. Measuring financial performance of companies, since many decisions are made inside and outside the company, is of importance. Decision making related to investments, companies’ capital increase, Agency relationship and many other decisions, are all based on measuring performance. The concept of corporate governance stands for the governing method in a public company and based on that, the way company responses the shareholders and other organizational stakeholders are formed
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