The Relationship between Corporate Governance and Directors Compensation in Listed Companies of Tehran Stock Exchange

Corporate governance refers to the mechanisms that direct and control companies. It identifies the distribution of rights and responsibilities among different participants in the corporation. Board of directors has one of the important roles in corporate governance. The purpose of this study was to determine the relationship between corporate governance and directors compensation in listed companies of Tehran Stock Exchange. It aims to verify empirically the relationship between the characteristics of boards of directors and cash compensation of directors in the Tehran Stock Exchange. With a view to testing hypothesis, we selected a sample of 92 listed corporations for the period 2006-2012 and the method used is a panel data approach. The results of this work reveal that profitability, firm size, board ownership and the duality of the chairman and the chief executive officer (CEO) has been positively related to the director compensation and the board size has a negative and non-significant relationship. Industry is also influencing directors compensation