Examining the interrelationships of corporate governance, liquidity and performance using the system of simultaneous equations

Document Type : Original Article

Authors

phd candidate, Allame Tabatabaei

Abstract

Today, experts consider corporate governance as the best mechanism for improving relations between shareholders and management. Therefore, its improvement can overshadow the liquidity situation and the performance of companies, which is related to the performance of shareholders and management. On the other hand, improving the liquidity and performance of companies can be considered as a stimulus to increase the attraction and attention of shareholders and management, and accelerate the process of improving liquidity and performance by re-stimulating corporate governance. Therefore, it is better to study these variables in the form of simultaneous wheels. The purpose of this research is to examine the interrelationships between corporate governance, liquidity and performance of companies listed on the Tehran Stock Exchange. For this purpose, corporate governance is based on the scoring method of corporate governance by Brown and Kaylor (2006) and its adjustment according to the corporate governance draft of Tehran Stock Exchange (2006), with 7 mechanisms of dual duties of the CEO, independence of the board of directors, size of the board of directors, ownership of institutional investors, the size of the auditing firm, the tenure of the auditor and the tenure of the CEO; Liquidity has been measured using the stock turnover rate and performance with an emphasis on growth opportunity (Tobin's Q), and using the elimination sampling method in the period from 1388 to 1392, a sample was selected from the Tehran Stock Exchange and according to the theoretical foundations of corporate governance, Liquidity and performance have been explained in the form of simultaneous equations system. The results of the estimation of regression models in the form of simultaneous equations show that the effect of some corporate governance mechanisms on the performance of companies is inverse and significant without considering the variables of liquidity mediators. There is a two-way relationship between performance and liquidity without considering the mediating variable of corporate governance, and considering it, only the effect of liquidity on performance is significant. Finally, there is no significant relationship between corporate governance and liquidity.

Keywords

References

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