Mohamad Omid Akhgar; Hamze Zaheddoost
Abstract
The goal of my research is to explore relationship between the cost of capital and CEO turnover with an emphasis on investment opportunities in companies listed on Tehran Stock Exchange. By the expansion of companies, office's owners submit the company to managers. High cost of capital which stems from ...
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The goal of my research is to explore relationship between the cost of capital and CEO turnover with an emphasis on investment opportunities in companies listed on Tehran Stock Exchange. By the expansion of companies, office's owners submit the company to managers. High cost of capital which stems from a poor decision-making in the process of management, might lead on account of sufficient investment to overlook the investments opportunities. Therefore, in a course of assessing the performance of managing committee and decisions concerned them, it might be effective. This research is practical and descriptive-correlative, from the viewpoint of purpose and nature, respectively. In order to achieve my purpose, 188 companies which has been accepted among the Tehran Stock Exchange, during 1387 to 1394 on the basis of systematic sampling-deletion method and overally, in order to perform the analysis, 1504 firm-years is considered. In line with the previous efforts, two assumptions has been cited, and two models: The growth rate of the market value of the total assets and Tobin’s Q have been tested as the representative of investment opportunities. In order to trial the validity of assumptions, we made use of logical regression and compound data. Findings on the basis of Tobin’s Q illustrate that there is a positive and meaningful relationship between cost of capital and CEO turnover. This means that the cost of capital is the explanatory power of the replacement CEO. We also find out that the investment opportunity intensifies the cost of capital and the CEO turnover; however, in the model of growth rate of market value of the total assets, there was no sign between the cost of capital and the CEO turnover.
