The Effect of Managerial Compensation and Ability on the relationship between Business Strategy and Firm Value

The value of the company is one of the most important components of evaluating economic units, especially joint-stock companies. The value of a company is reflected in its stock price, therefore, the prosperity of a company's stock can be considered as a result of the value of the economic unit. Among the factors that can affect the value of the company are business strategy, managerial compensation and managerial ability. Based on this, the current research examines the effect of managerial compensation and ability on the relationship between business strategy and firm value in companies listed on the Tehran Stock Exchange. In order to achieve the above objectives, three hypotheses were formulated. Therefore, in order to test the research hypothesis, a sample of 140 firms was selected from the firms listed in Tehran Stock Exchange during the period 2015 to 2021. Multivariate regression model based on combined data was used to test the research hypothesis. The findings of the research showed that the business strategy has a positive and significant effect on the firm value, that is, an increase in the business strategy leads to an increase in the firm value; In addition, the results indicate that managerial compensation and ability strengthen the relationship between business strategy on firm value.