Studying the effect of corporate governance on financial performance of firms accepted in Tehran Stock Exchange

Abstract

The phenomena such as privatization and the development and spread of corporate governance concepts and also the importance of issues such as institutional investors make doing researches and surveys about the importance of ownership concentration inevitable. More importantly, gaining the knowledge about the elements of economic system and the relationships between some related variables is deemed to be necessary in devising the laws related to corporate governance. In the present research, we have tested the relationship between financial performance indexes and the ownership percentage of institutional stockholders as the bases for corporate governance in firms accepted in Tehran Stock Exchange during the years between 2006 and 2010 and we have used regression test, data panel method to study the relationships. The experimental evidences show that there is a meaningful relationship between the existence of institutional stockholders and financial performance indexes such as return of sales, return of assets, and operational profit to assets, and return of owners' equity.