Empirical Studies in Financial Accounting

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Memorandum of Understanding

Article Writing Guide

Files

Consultants

Consultants

Consultants

Consultants

Consultants

Publons

The Relationship between Corporate Governance and its Dimensions and investment Efficiency on the Firms Accepted in Tehran stock Exchange

Document Type : Research Paper

Authors

1 Assistant Professor, Allameh Tabataba’i University

2 Professor, Allameh Tabataba’i University

3 Ph.D. Student in Accounting, Allameh Tabataba’i University.

Abstract

Previous researches revealed that corporate governance mechanisms assists the investors in motivating and compelling pillars of company management to more efficient use of corporate resources with doing stewardship duty. Managers can play a critical role in using the resources through making appropriate decisions about optimal investment. Inefficient investment could be the result of poor corporate governance. In other words, corporate governance is a key and monitoring tool in investment efficiency. The purpose of this study is to analyze the relationship between corporate governance and investment efficiency in the firms listed in the Tehran Stock Exchange. For testing hypotheses multivariate linear regression model using estimated generalized least squares method (EGLS) was used. To reach the purpose of the study, a sample of 138 companies were selected by screening (systematic deleting) in the years 2008 to 2014. Based on 93 indicators of hassass yegane and Salimi (2011), we estimated the efficiency of corporate governance and its dimensions such as transparency, effectiveness of board, shareholder rights and the effects of ownership. We also measured the efficiency of investment according to the Richardson’s (2006) model. In general, the results show that corporate governance and its dimensions have a significant positive effect on the efficiency of investment. In addition, a significant and positive impact of variables control such as investment opportunities (Tobin's Q) and firm size on investment efficiency was confirmed. The cash flow had a negative and significant relationship on investment efficiency

Keywords

References
بادآورنهندی، یونس، خانقاه­زاده، وحید(1393) "ارتباط بین برخی مکانیزم­های حاکمیت شرکتی و کارائی سرمایه­گذاری در مراحل چرخه عمر"دانش حسابداری. سال پنجم(شماره 18) کرمان. صص134-113.
تهرانی، رضا، حصارزاده، رضا(1388) "تاثیر جریان­های نقدی آزاد و محدودیت در تامین مالی بر بیش­سرمایه­گذاری و کم­سرمایه­گذاری" تحقیقات حسابداری و حسابرسی. شماره 3. تهران. صص 67-50.
حساس­یگانه، یحیی، سلیمی، محمدجواد(1390). "مدلی برای رتبه­بندی حاکمیت شرکتی در ایران". فصلنامه مطالعات تجربی حسابداری مالی. سال نهم(شماره 30). ، صص 35-1.
صفری گرایلی، مهدی، بالارستاقی، عالیه(1394)." بررسی عوامل موثر بر کیفیت حاکمیت شرکتی در شرکت­های پذیرفته شده در بورس اوراق بهادار تهران". مطالعات تجربی حسابداری مالی، سال 12، شماره 47، پائیز 1394، صص 93تا 112.
عرب­صالحی، مهدی.، امیری، هادی.، کاظمی نوری، سپیده. (1393)."بررسی تاثیر اعتماد به نفس بیش از حد مدیران ارشد بر حساسیت سرمایه­گذاری  جریان­های نقدی" . مجلهپژوهش­هایحسابداریمالی.  سال ششم(شماره 2، پیاپی20). صص128-115.
مدرس، احمد.، حصارزاده، رضا. (1387). "کیفیت گزارش­گری مالی و کارائی سرمایه­گذاری". فصل­نامه بورس اوراق بهادار. 1 (2)صص116-85.
هاشمی، عباس. صمدی، سعید. هادیان، ریحانه(1393)." اثر کیفیت گزارشگری مالی و سررسید بدهی بر کارائی سرمایه­گذاری". مطالعات تجربی حسابداری مالی، سال 11، شماره 44، زمستان 1393، صص 117تا 143.
Al-Malkawi, H.-A. N., et al. (2014). Corporate governance practices in emerging markets: The case of GCC countries. Economic Modelling 38: 133-141.
Biddle, G. & G. Hilary (2006). "Accounting Quality and Firm-Level Capital Investment". The Accounting Review. Vol.81, No.5, PP. 963-982.
Biddle, G., G. Hilary & R. Verdi (2009), "How does Financial Reporting Quality Relate to Investment Efficiency?" Journal of Accounting & Economics, Vol. 48, PP. 112-131.
Billett, M. T., Garfinkel, A., and Jiang, Y. (2011). "The influence of governance on investment: Evidence from a hazard model". Journal of Financial Economics, 102 (3): 643–670.
Chen, L., Chunlei, L., and Guanyu, W. (2013). "Financial constraints, investment efficiency and corporate governance". Empirical evidence from China, Service Systems and Service Management (ICSSSM). 10th International conference.
Chen, S. S., Ho, K. W., Lee, C. f., & Yeo, G. H. H. (2000). "Investment opportunities, free cash flow and market reaction to international joint ventures".Journal of Banking & Finance, 24(11), 1747-1765. http://dx.doi.org/10.1016/S0378-4266(99)00103-X
Cheung, Y., Stouraitis, A., and Tan, W. (2011). "Corporate governance, investment, and firm valuation in Asian emerging markets".Journal of International Financial Management & Accounting, 22 (3): 246-273.
Chung, K. & Zhang, H. (2011). "Corporate governance and institutional ownership". Journal of Financial and Quantitative Analysis, 46 (1): 247-273.
Conyon, M.J., and Peck, S.I., (1998). "Board control, remuneration committees, and top management compensation". Academy of Management Journal, 41 (2): 146–157.
Degryse, H., and DeJong, A., (2001), "Investment spending in the Netherlands: Asymmetric information or managerial discretion?" working paper, Erasmus University Rotterdam.
Fama, E., and Jensen, M., (1983). "Agency problems and residual claims". Journal of Law and Economics, 26 (2): 327–349.
Fazzari, S., Hubbard, R, G., and Petersen, B. (1988). "Financing Constraints and Corporate Investment". Brooking Papers on Economic Activity. 19: 141-195.
Francis, H., Hasan, I., Song. L., and Waisman. M. (2013). "Corporate governance and investment cash flow sensitivity: Evidence from emerging markets". Emerging Markets Review, 15 (3): 57–71.
Gillan, S.L., and Starks, L. T. (2003). "Corporate governance, corporate ownership, and the role of institutional investors: a global perspective". Journal of Applied Finance, 13 (2): 4 –22.
Grabowski, H., and Mueller, D.C. (1972). "Managerial and stockholder welfare models of firm expenditures". Review of Economics and Statistics, 54 (1): 9–24.
Grundy, B. D., & Li, H. (2010). "Investor sentiment, executive compensation, and corporate investment".Journal of Banking & Finance, 34(10), 2439-2449. http://dx.doi.org/10.1016/ j. jbankfin. 2010.03. 020.
Hubbard, R. (1998). "Capital-Market Imperfections and Investment". Journal of Economic Literature, 36(1): 193-225.
Li, Q., and Wang. T. (2010). "Financial reporting quality and corporate investment efficiency: Chinese experience". Nankai Business Review International, 1 (2): 197-213.
Liao, Chih-Hsien (2011); "The effect of stock-based incentives and governance mechanisms on voluntary disclosure of intangibles", Advances in Accounting, 27(14), 294-307.
Mueller, D. C., and Peev, E. (2007). "Corporate governance and investment in Central and Eastern Europe". Journal of Comparative Economics, 35 (2): 414– 437.
Myers, S.C., and Majluf, N.S. (1984). "Corporate financing and investment decisions when firms have information that investors do not have". Journal of Financial Economics, 13 (2): 187–221.
Nasrum, M. (2013). "The Influence of Ownership Structure, Corporate Governance, Investment Decision, Financial Decision and Dividend Policy on the Value of the Firm Manufacturing Companies Listed on The Indonesian Stock Exchange". Journal Managerial, 1(1): 1-10.
Polk, C., & Sapienza, P. (2009). "The stock market and corporate investment: A test of catering theory". The Review of Financial Studies, 22(1), 187-217. http://dx.doi.org/10.1093/rfs/hhn030.
Richardson, S. (2006). "Over-investment of free cash flow". Review of Accounting Studies. 11, 159–189.
Rocca, M. Cariola, and Elvira, T, L, R, (2007). "Overinvestment and underinvestment problems: Determining factors, consequences and solutions", Available at SSRN: http:/www.ssrn.com.
Sarwar Uddin. A, Wali Ullah. G. M., Samiul Parvez. A, Ashikur. R. (2016)." An Empirical Study on Corporate Governance and Islamic Bank Performance: A Case Study of Bangladesh". Journal of Finance & Banking Studies 5(4), 2016: 103-116. https://doi.org/10.20525/ijfbs.v5i4.478.
Stein, J.(2003) "Agency, Information and corporate investment" in Handbook of the Economics of Finance, edited by George constantinides, Milt Harris and Rene Stulz, Elsevier 2003, 111-165.
Verdi, R. (2006). "Financial reporting quality and investment efficiency". Unpublished PhD Dissertation, Faculties of the University of Pennsylvania in Partial Fulfillment, OR Working paper, Available at SSRN: http://www.ssrn.com.
Wei-Ju Chen. (2013). "Can Corporate Governance Mitigate the Adverse Impact of Investor Sentiment on Corporate Investment Decisions? Evidence from Taiwan ". Asian Journal of Finance & Accounting ISSN 1946-052X .2013, Vol. 5, No. 2.
Weisbach, M. (1988). "Outside directors and CEO turnover". Journal of Financial Economics, 20 (1-2): 431– 460.
Yang, J., and Jiang, Y. (2008). "Accounting information quality, free cash flow and overinvestment: A Chinese study". The Business Review, 11 (1): 159-166.
Empirical Studies in Financial Accounting
Volume 13, Issue 52 - Serial Number 52
January 2017
Pages 9-36
Files
History
  • Receive Date: 14 November 2016
  • Revise Date: 26 August 2017
  • Accept Date: 12 January 1987
Share
How to cite
Statistics