The Effect of Corporate Governance on Financial Performance of Listed Firms in Tehran Stock Exchange

Zekvan Imani, Ali Homayoon, Ebrahim Zamani


The main objective of the present study is to investigate the effect of corporate governance (including the duality of CEO, non-executive Board ratio, ownership concentration, institutional ownership, CEO influence and Board independence) on financial performance of listed firms on the Stock Exchange in Tehran. To achieve this purpose, a sample of 95 firms listed in Tehran Stock Exchange within the 5-year period from 2010 to 2014 is examined. To verify the hypotheses, multiple regression analysis is used. The results of the hypotheses testing indicate that there is a significant correlation between corporate governance (including the duality of CEO tasks, concentration of ownership, institutional ownership, and the independence of the Board) and financial performance (net profit after tax) of the firms. The results also indicate that there is a significant correlation between the corporate governance (including the ownership concentration, institutional ownership and CEO influence) and financial performance (return on investment) of the firms.

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