Examining Financial Performance and Corporate Governance in Tehran Stock Exchange: A Hybrid Machine Learning and Data Envelopment Analysis Approach

Subject Areas : Financial and Economic Modelling

Pooneh  Noparvar Saravi ¹ (Master's student in Accounting, Rozbahan Higher Education Institute, Mazandaran, Iran)
Morteza  Bagheri ² (Master's student in Accounting, Shahid Beheshti University, Tehran, Iran, )
Seyed Sadegh  Hadian ³ (Master's student in Accounting with a specialization in Auditing, Faculty of Administrative and Economic Sciences, Ferdowsi University, Mashhad, Iran)

Received: 2023-10-18 Accepted : 2024-02-23 Published : 2024-04-27

Keywords: Financial Performance , Corporate Governance, Machine Learning, Human Capital,

Abstract :

In the backdrop of an ever-evolving global business landscape and intense market competition, companies are faced with the imperative of strategically managing factors that influence their financial performance. This research delves into the intricate relationship between financial performance enhancement and corporate governance, with particular attention to the mediating role of human capital. The study centers its investigation on companies listed on the Tehran Stock Exchange and comprises a comprehensive sample of 140 top-level managers. A composite sampling approach, comprising a simple random sampling technique and Morgan's table, was employed to judiciously select a representative cohort of 103 participants. In the pursuit of rigorous academic analysis, the research leverages a goal-oriented, applied methodology, employing a descriptive survey design and a quantitative approach. The primary data for the study were methodically collected through rigorously designed and standardized questionnaires. Subsequent to data acquisition, a meticulous analytical process was undertaken using the Partial Least Squares (PLS) software, aligning with the latest developments in quantitative research techniques. The results stemming from hypothesis testing offer compelling insights into the dynamic relationship between corporate governance, human capital, and financial performance enhancement. Our findings convincingly demonstrate a significant positive impact of both corporate governance and human capital on the enhancement of financial performance in the context of Tehran Stock Exchange's listed companies. Furthermore, the empirical evidence strongly suggests that human capital plays a pivotal mediating role in the relationship between corporate governance practices and financial performance improvements. This study, in its pursuit of academic rigor, underscores the effectiveness of a novel hybrid approach, thoughtfully integrating machine learning and data envelopment analysis, to comprehensively examine the intricate interplay between financial performance enhancement and corporate governance within the context of the Tehran Stock Exchange's listed companies. The study contributes to the evolving body of literature in this domain and provides valuable insights for practitioners, policymakers, and researchers.

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