Providing an Optimal Total Productivity Model based on the Combination of the Ownership and Supervisory Efficiency of Independent Managers
Subject Areas : governmental managementAmir Ialisarabi 1 , Naser Barkhordar 2 , Gasem Zareei 3
1 - Assistant Prof, Department of Public Management, Payame Noor University, Tehran, Iran.
2 - Assistant Prof, Department of Public Management, Payame Noor University, Tehran, Iran.
3 - Associate Prof, Department of Management, Mohaghegh Ardabili University, Ardabil, Iran.
Keywords: productivity, composition of ownership, supervisory efficiency, independent managers, Tehran Stock Exchange,
Abstract :
The aim of the current research was to present an optimal model for total productivity based on the combination of ownership and supervisory efficiency of independent managers of companies listed on the Tehran Stock Exchange. This research was a descriptive-deductive description in terms of its practical purpose and the method used. In order to analyze the data using the panel data method and to test the hypotheses, multiple linear regression tests were conducted in a sample consisting of 80 selected companies admitted to the Tehran Stock Exchange in the period of 1393-1400. In this research, the rate of return on equity and the ratio of book value to market value were used to measure the productivity index. The results of the estimation of the research models showed that when the variable rate of return on equity is considered as a productivity index, the composition of ownership has a significant negative effect on productivity. In fact, greater concentrated ownership in the institutional and major shareholders of the company causes a significant decrease in the productivity of companies; however, the increase in the number of non-commissioned members compared to the total number of board members as an indicator of the supervisory efficiency of independent directors does not have a significant effect on productivity. The effects of financial leverage and company size on the productivity of companies were found to be both negative and positive, that is, when the variable of the ratio of book value to market value is considered as a productivity index, ownership composition has a negative effect on productivity, but the effect of increasing the supervisory efficiency of independent managers on productivity was found to be significantly positive. As a result, reducing the concentration of managers’ ownership and increasing the number of non-commissioned board members can improve productivity.
Key Words: productivity, composition of ownership, supervisory efficiency, independent managers, Tehran Stock Exchange
1.Introduction
Each of the different combinations of ownership (types of ownership) can be effective in improving the performance and productivity of the company. Therefore, the methods of controlling the performance of managers and the factors affecting their performance, as well as the method of measuring the effect of each type of ownership on the productivity of companies, are among the issues that are of great interest to shareholders, managers and researchers. For this reason, the relationship between the structure (composition) of ownership and productivity, and especially the performance of companies, has been the focus of many researchers, however, no consensus has been established regarding the nature of such a relationship. By achieving the optimal composition of the company's ownership structure, more appropriate measures can be taken to improve its productivity.
- Literature Review
Adopting the optimal policy to determine the ownership structure by managers plays an important role in risk management, maximizing shareholders' wealth, and as a result, increasing productivity improvement indicators. The financial literature shows that the main reasons for the failure of companies can be poor management and inappropriate combination of ownership structure. Some researchers point out that large shareholders are perceived as a symbol of a better regulatory environment by the least shareholders. This discussion is compatible with the view that ownership concentration is a supervisory attitude of corporate governance. Concentrated ownership can harm the company's value, especially when large shareholders not only have ownership concentration in the company, but are also present in the management teams.
- Methodology
The aim of the current research was to present an optimal model for total productivity based on the combination of ownership and supervisory efficiency of independent managers of companies listed on the Tehran Stock Exchange. This research was a descriptive-deductive description in terms of its practical purpose and the method used. In order to analyze the data using the panel data method and to test the hypotheses, multiple linear regression tests were used in a sample consisting of 80 selected companies admitted to the Tehran Stock Exchange in the period of 1393-1400. In this research, the rate of return on equity and the ratio of book value to market value were used to measure the productivity index.
- Results
The results of the estimation of the research models showed that when the variable rate of return on equity is considered as a productivity index, the composition of ownership has a significant negative effect (-0.48) on productivity. In fact, greater concentrated ownership in the institutional and major shareholders of the company causes a significant decrease in the productivity of companies; however, the increase in the number of non-commissioned members compared to the total number of board members as an indicator of the supervisory efficiency of independent directors does not have a significant effect on productivity (sig=0.227).
- Discussion
The effects of financial leverage and company size on the productivity of companies were evaluated as negative and positive, respectively. When the variable of the ratio of book value to market value is considered as a productivity index, ownership composition has a negative effect on productivity, but the effect of increasing the supervisory efficiency of independent managers on productivity was found to be significantly positive. As a result, reducing the managers’ ownership concentration and increasing the number of non-commissioned board members can improve productivity.
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