The Investigation of the Relationship between Corporate Governance Mechanisms and Value-based Financial Performance Measures

In this study, the relationship between corporate governance mechanisms (ownership concentration, institutional ownership, CEO duality, the size of the Board and kind of auditor) with value-based financial performance measures (market value added (MVA), economic value added (EVA), cash value added (CVA)) is investigated. The statistical population is composed of listed companies in Tehran Stock Exchange and the sample of study was selected using random sampling including 101 firms for the period 2006 to 2011. The hypotheses were examined by multiple panel regression methods and research hypotheses were estimated in three separate models. The results of market value added model show that there is a significant negative relationship between ownership concentration, CEO duality and kind of audit mechanisms with market value added, while no relationship was found between institutional ownership and size of the board with market value added. EVA model results indicate a significant negative relationship between ownership concentration and CEO duality task with economic value added. In this model, no significant relationship was found between the measures of institutional ownership, size of the board and type of audit with economic value added. An examination of cash value added model indicates that there seems a positive relationship between ownership concentration, institutional ownership and the size of the Board with cash value added while there is no relationship between CEO duality and cash value added.