The Effect of Institutional Shareholders on the Relationship between CEO Power and Capital Structure in Companies

The main purpose of this research is to investigate the effect of Institutional Shareholders on the relationship between CEO power and capital structure decision making in companies listed in Tehran Stock Exchange. To this end, the CEO task duality criteria, CEO tenure and CEO ownership percentage were used to measure CEO power. Benchmarks such as book value leverage, market value leverage, short-term leverage and long-term leverage were used as capital structure representatives. Research hypotheses based on a statistical sample consisting of 106 companies during an 8-year period from 2011 to 2018 were tested using multivariate regression models. The results of the test showed that there is a positive and significant relationship between CEO power and capital structure (book value leverage, market value leverage, and short-term leverage). Also, there is a negative and significant relationship between the CEO power and the capital structure (long-term leverage). In addition, institutional shareholders have a negative moderating effect on the relationship between CEO power and market value leverage.