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

The main objective of the present study is to investigate the effect of corporate governance (including theduality of CEO, non-executive Board ratio, ownership concentration, institutional ownership, CEOinfluence and Board independence) on financial performance of listed firms on the Stock Exchange inTehran. To achieve this purpose, a sample of 95 firms listed in Tehran Stock Exchange within the 5-yearperiod 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 corporategovernance (including the duality of CEO tasks, concentration of ownership, institutional ownership, andthe independence of the Board) and financial performance (net profit after tax) of the firms. The resultsalso indicate that there is a significant correlation between the corporate governance (including theownership concentration, institutional ownership and CEO influence) and financial performance (returnon investment) of the firms.

Keywords:

Corporate Governance , Financial Performance , Return on Investment , Return on Equity