Studying the relation between Corporate Governance Mechanisms on the Amount of Created Shareholders Value

Subject Areas : Management Accounting

قدرت اله طالب نیا ¹ , نظام الدین رحیمیان ² , مجتبی باقری نویر ³

1 - مسئول مکاتبات
2 - ندارد
3 - ندارد

Received: 2010-07-24 Accepted : 2011-06-10 Published : 2011-12-22

Keywords: Corporate Governance, Institutional investors, independence directors, nonexecutive directors, created shareholders value,

Abstract :

This study is aimed to provide evidence on the relationship between the corporateGovernance mechanisms and the amount of created shareholders value. Independentvariables of the study are corporate Governance mechanisms, which are examinedfrom four aspects, including number of institutional investors, investment ratio ofinstitutional investors, independence of the members of the board of directors, and theratio of nonexecutive directorse. The dependent variable of the study is the createdshareholders value, which is measured based on the Pablo Fernandez Model. PabloFernandez believes that since book values are used in the calculation of the EconomicValue Added (EVA), the calculations lack a sufficient reliability and may result indecision makers’ mistakes. Pablo Fernandez proposed a model in which marketvalues of shares are used instead of book values. The control variable of the study isthe size of the company. In this study, the dependent variable is tested with a oneyearinterval in comparison with the independent variables. The statistical samplewas selected based on the systematic deletion and the application of limitations,resulting in the selection of 98 corporations listed in the Tehran Stock Exchange(TSE) during 2004-08 For testing the relation between independent and dependentvariable of the study, simple and multiple regression methods were used. Generally,the results of the study indicate that there is no significant relationship between thecorporate Governance mechanisms and the amount of created shareholders value.