Abdorreza Asadi; Mohammad Ali Abri
Abstract
These days, the performance of banks in optimal collecting and allocating the resources, can boost production, create jobs, and increase economic growth. An efficient banking system with the right monetary policy, by controlling liquidity and inflation and directing resources to productive economic activities, ...
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These days, the performance of banks in optimal collecting and allocating the resources, can boost production, create jobs, and increase economic growth. An efficient banking system with the right monetary policy, by controlling liquidity and inflation and directing resources to productive economic activities, plays an important role in economic development. However, the performance of banks themselves is affected by various political, economic, managerial and social factors, and the study of these factors has been one of the topics of interest to researchers. On the other hand, Banks operate in a unique environment of public oversight and a set of banking rules and regulations. The corporate governance framework in banks is more complex than in other companies. Corporate governance mechanisms reduce agency problems in companies and the quality of these mechanisms is relative and varies from company to company and can affect different aspects of performance. In this study, the relationship between ownership structure and corporate governance mechanism of banks with their financial performance is investigated using structural equation modeling. Theoretical frame work From the perspective of corporate governance, shareholders can align the interests of managers with their own interests by using corporate governance mechanisms. One of the most important corporate governance mechanisms is the ownership of managers in the bank. Glasman and Rhodes (1980) compared financial institutions run by their owners with institutions that were separate from management. They showed that the profitability of institutions whose owners are involved in management is higher. In their supervisory role, the members of the board of directors are responsible for supervising and encouraging the managers to act in accordance with the interests of the shareholders. In fact, corporate governance can be considered as including legal, cultural and institutional arrangements that determine the direction of movement and activity of companies. The components and mechanisms of this governance include shareholders and their ownership structure, board members and their composition, and the management of the company, which is led by the CEO, and other stakeholders that can influence the movement of the company. As one of the external mechanisms of corporate governance, institutional investors play an important role in eliminating information asymmetry and reducing agency costs. Institutional investors openly monitor the company by gathering information and pricing management decisions implicitly and by managing the company's operations. Corporate governance can play an important role in improving corporate performance and there is a close relationship between the quality of corporate governance and corporate financial performance in capital markets. Methodology The present study is an applied research in terms of objective, because its results can be used by investors, managers, shareholders and capital market analysts, as well as banks listed on the stock exchange. In terms of method of implementation, this research is considered as a descriptive-correlational type and due to the fact that its variables have occurred in the past, it is known the causal-post-event research. In this study, the effect of banks’ ownership structure and corporate governance components on the performance was studied using data from 18 listed banks in Tehran Stock Exchange during 2011-2017. The data required to calculate the research variables were collected from the audited financial statements of the accepted banks and through the information databases of the Tehran Stock Exchange as well as the new management software. In order to analyze the data and test the research hypotheses, the structural equation modeling method has been used. Results & Discussion The results showed that the direct effect of ownership structure on corporate governance is insignificant and in fact the mechanism of corporate governance is not affected by ownership structure. Therefore, the first hypothesis of the study failed to confirm. Also, the ownership structure has a significant and inverse effect on financial performance. This means that by increasing the concentration of ownership at the disposal of a limited number of shareholders as well as the ratio of institutional and state ownership, the financial performance of banks decreases significantly and vice versa. Therefore, the second hypothesis of the research was confirmed. On the other hand, the effect of corporate governance on financial performance is also positive and significant, which shows that improving the corporate governance mechanism can significantly improve the financial performance of banks, so the third hypothesis of the study was confirmed as well. The results also showed that the indirect effect of ownership structure through corporate governance on the financial performance of banks is significant and the fourth hypothesis also was confirmed. Conclusions & Suggestions The findings showed that the dimensions of corporate governance have a significant positive effect on the financial performance of banks and show that improving the corporate governance mechanism can significantly improve the financial performance of banks. Finally, the results showed that the corporate governance can reduce the severity of the negative effect of the dimensions of the ownership structure on the financial performance of banks. The findings indicate that the shareholding of government-affiliated institutions and companies and financial institutions, especially with a majority stake, causes these shareholders to pursue their own interests instead of the total interests of shareholders and the value of the company (bank), resulting to weaken the financial performance. Therefore, corporate governance mechanisms and proper governance system can increase the financial performance of banks. Because one of the possible reasons for the above conclusion is the participation of executive and non-executive members of the Board of Directors in the activities and as a result of their supervisory role in banking operations. There is also evidence that the large size of the board can help CEOs through consulting can play an important role in corporate performance. According to the obtained results, some suggestions can be made as follows. Capital market policymakers and institutional shareholders should be aware that the presence of non-executive members on the board of directors of companies cannot reduce the agency problems and help the company perform better, so try to use the presence of more executive members. It is also suggested that the members of the board of directors of companies and banks, shareholders and auditors and auditing firms become more familiar with issues related to the corporate governance system so that they can properly play a role in the corporate governance system and thus influence Increase the value of companies.
Abdorreza Asadi
Abstract
The actions of managers to apply tax aggressive policies are increasing and companies continue to take the action as long as the costs of these policies are not overpowered the benefits. Present study investigates the relationship between ownership structure and tax aggressive policies.
The sample ...
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The actions of managers to apply tax aggressive policies are increasing and companies continue to take the action as long as the costs of these policies are not overpowered the benefits. Present study investigates the relationship between ownership structure and tax aggressive policies.
The sample firms includes 170 listed companies in Tehran stock Exchange over the years 2009-2014. The first three hypotheses are developed to test the relationship between components of ownership structure and tax policies, and forth hypothesis tests moderating role of firms’ performance.
The results indicate significant negative relationship between public and institutional ownership and tax aggressive policies, whereas there is insignificant relationship between private ownership with tax aggressive policies. Moreover the result indicates that by increasing in institutional and public ownership, managers decrease tax aggressiveness but increase in private ownership do not affect managers’ aggressive policies. In the other hand the effect of ownership structure on tax policies in strong firms is highly take place.
Abdorreza Asadi; Mohammadreza Abbaszadeh
Abstract
This paper investigates the effect of firms’ characteristics on leverage ratios
of affiliated and unaffiliated firms in Tehran Stock Exchange (TSE). In this
regard, financial data have been collected from 200 non-financial listed
companies over the five-year period. A regression model with dummy
variable ...
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This paper investigates the effect of firms’ characteristics on leverage ratios
of affiliated and unaffiliated firms in Tehran Stock Exchange (TSE). In this
regard, financial data have been collected from 200 non-financial listed
companies over the five-year period. A regression model with dummy
variable and t-statistic has been used to test the six hypotheses.
The results show a significant negative effect of profitability on leverage
ratios. The effect of growth opportunity on leverage ratios is significantly
positive and tangibility has a significant negative effect on short-term debt
and total debt ratios but for long-term the effect of debt ratio is positive. The
effect of firm size on leverage ratios is insignificant. Out findings also
indicate that the government ownership has a significant effect on the
relationship between firms’ characteristics and capital structure and the
pecking order theory is strongly supported as a pertinent theory to the capital
structure of Iranian companies.
