Investigating the Relationship between Corporate Governance with Bankruptcy Probability in Companies Listed in Tehran Stock Exchange

Corporate governance is set of internal and external control mechanisms that establish balance between stockholders with needs and authority of board of directors. Poor corporate governance can increase the probability of corporate failure or bankrupt .The present paper aims to investigate the relationship between some mechanisms of corporate governance and bankruptcy. The purpose of this study, investigating relationship between some of corporate governance mechanisms with bankruptcy probability in companies listed in Stock Exchange. The research sample consisted of 115 companies, including 40 distressed companies and 75 healthy companies that is selected among companies listed in stock exchange at time period 1387-1392 and hypothesis testing is done using of logistic regression. In order to study the effects of simultaneous variables on the dependent variable, in addition to separate regression overall regression was estimated. Results indicate that among five studied mechanisms of corporate governance included type of audit's report, amount of board of director’s reward, institutional ownership and independence of board of directors are negatively related to bankruptcy possibility but no significance relationship between size of board of directors and bankruptcy possibility was found.