Examining the effect of corporate governance on the relationship between firm value of Firms Listed on the Tehran Stock Exchange

Main Article Content

Hadi Rashedi
Toraj Dargahi

Abstract

The purpose of this paper is to examine the effect of corporate governance on the relationship between the firm value  for the listed companies in Tehran Stock Exchange during period 2013-2018.  The corporate governance mechanisms include board size, board composition, institutional ownership, financial knowledge of the board, CEO duality, state-ownership and managerial ownership. The population is composed of the firms listed on the Tehran Stock Exchange. Filtering technique is used to select the sample. Furthermore, the multivariate regression method, Analysis of Variance (ANOVA) and tree regression methods are used to test the hypotheses. The findings reveal that firm's value prediction is influenced by the two variables of managerial ownership and the non-executive members of the board. The findings of this research show that investors conceive earnings management negatively and earnings management has a negative effect on firm value. But in corporations with high-quality corporate governance this effect is reduced. In other words, corporate governance mechanisms has a positive effect on the relationship between firm value and earnings management and firms with a higher corporate governance score face a less negative effect from earnings management. Key words: Corporate governance, firm's value, institutional ownership, state-ownership, managerial ownership.

Downloads

Download data is not yet available.

Article Details

How to Cite
Rashedi, H., & Dargahi, T. (2019). Examining the effect of corporate governance on the relationship between firm value of Firms Listed on the Tehran Stock Exchange. JMDMA, 2(5), 24-32. Retrieved from http://jmdma.ir/index.php/JMDMA/article/view/45
Section
Articles
Author Biography

Hadi Rashedi, Department of Accounting, Member of Elite National Foundation, Islamic Azad University, Maragheh Branch

Department of Accounting, Member of Elite National Foundation, Islamic Azad University, Maragheh Branch

References

Ahmadi, M. and M. Abbasi, 2011. The impact of CEO duality on the value of the firms listed on the Tehran stock exchange. J. Econ. Stud., 60: 113-150. Ammann, M., D. Oesch and M.M. Schmid, 2011. Corporate governance and firm value: International
Deylami, D.Z., M.M. Zadeh and A. Mazaheri, 2013. The effect of CEO tenure on firm value, agency costs and information risk. Empirical Stud. Account., 9: 21-39.
Esmaeilzadeh, A., A. Jalili and M.Z. Abbas-Abadi, 2010. The effect of corporate governance on the earnings quality of the Tehran stock exchange. J. Manage. Account., 7: 79-91.
evidence. J. Empirical Finance, 18: 36-55. Connelly, J.T., P. Limpaphayom and N.J. Nagarajan, 2012. Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand. J. Banking Finance, 36: 1722-1743.
Fresard, L. and C. Salva, 2010. The value of excess cash and corporate governance: Evidence from US cross listings. J. Financial Econ., 98: 359-384.
Gompers, PA.,Ishii, JL., Metrick, A., 2003. Corporate governance and equity prices. Quarterly Journal of Economics 118(1), pp. 107-155.
Gupta, P., Sharma, AM., 2014. A study of the impact of corporate governance practices on firm performance in Indian and South Korean companies. Procedia-Social and Behavioral Sciences 133, pp. 4-11.Gutierrez,
Koerniadi, H., Krishnamurti, C., Tourani-Rad, A., 2014. Corporate governance and the variability of stock returns. International Journal of Managerial Finance 10(4), pp. 494–510.
Kumar, J., 2004. Agency Theory and Firm Value in India. SSRN; Available at: http://papers.ssrn.com/abstract=501802.
Kusandi, Y., 2011. Do corporate governance mechanisms matter for cash holdings and firm value? Pacific-Basin Finance J., 19: 554-570.
LaPorta, R., Lopez, F., Shleifer, A., Vishny, RW., 1998. Law and finance. Journal of Political Economy 106(6),pp.1113-1155.
Lee, S., 2008. Ownership Structure and Financial Performance: Evidence from Panel Data of South Korea.University of Utah, Department of Economics. Working Paper 17.
Leung, N.W. and MA. Cheng, 2013. Corporate governance and firm value: Evidence from Chinese state-controlled listed firms. China J. Account. Res., 6: 89-112.
LH., Pombo, C., 2009. corporate ownership and control contestability in emerging Markets: the case of Colombia. Journal of Economics and Business 61(2), pp. 112-139.
Mousavi, Z., Moridipoor, H., Jari, A., 2010. Evaluating the effect of corporate governance mechanisms on the performance of companies listed in Tehran stock exchange. Quarterly financial accounting (in Persian) 2(6), pp. 141-155.
Omran, M., 2009. Post-Privatization Corporate Governance and Firm Performance: The Role of Private Ownership Concentration, Identity and Board Composition. Journal of Comparative Economics 37, pp. 658–673.
Ozkan, A. and N. Ozkan, 2004. Corporate cash holdings: An empirical investigation of UK companies. J. Banking. Finance, 28: 2103-2134.
Rashedi, H., & Dargahi, T. (2019). The Impact of Earnings management and the effect of earnings quality in relation to bankruptcy level (Firms listed at the tehran stock exchange). JMDMA, 1(4), 111-127. https://doi.org/10.3261212/2019.4.3
Shleifer, A., Vishny, RW., 1997. A Survey of Corporate Governance. The Journal of Finance 52, pp. 737-783.
Sinayi, H., M. Salgi and K. Mohammadi, 2011. The impact of growth opportunity on the relationship between capital structure, dividends and ownership structures. J. Financial Account., 4: 87-102.
Stewart, GB., 1991. The Quest for Value: A Guide for Senior Managers. New York: Harper Business Publisher.
Tesamenyia, M., Onumeh, J., Tetteh-Kumah, E., 2008. Measurement of the Operational Efficiency on the Privatization of State-owned Banks. Critical Perspectives on Accounting 7(2), pp. 75-96.
The relationship between some corporate governance mechanisms and value created for equity holders and economic value added. J. Account. Accountancy, 2: 1-16.
Vincent, OA., Nicole, C., 2010. The relationship between firm performance and board characteristics in Ireland. EuropeanManagement Journal 28(5), pp. 387–399.
Yeganeh, Y.H. and I. Dadashi, 2010. The impact of corporate governance on the opinions of independent auditors. J. Manage. Account. 5: 65-73. Zadeh, R.B.H., Y.B. Nahandi and S. Mahmoudzadeh, 2012.