Investigation of the Relationship between Management Compensation and Economics Measure's Performance Assessment of Companies listed in Tehran Security Exchange

Agency problems along with management accountability and shareholders rights are related issues which need to be addressed. Management compensation is theoretically wise solution to this issues. In this paper we investigate the effect of management compensation and their percentage of ownership share of stocks on firm’s performance. The sample used for this study consists of 83 actively traded companies listedin Tehran stock exchange from 2005 to 2010. Panel data regression result indicates significant relation between management compensation and economic measures of performance (EVA, MVA and modified EVA). Findings are also indicate a significant relation betweenpercentage of manager’sownership shares of stock and market value added but no relation with other economic measures of performance.