Title: Corporate Governance: Strategic Role of Board of Directors and Its Effect on Financial Performance Case Study: Auto Companies Listed in Tehran Stock Exchange
Abstract: Abstract Corporate governance is a critical factor in efficiency improvement in any economy. It represents a collection of interactions among board of directors, corporate management, shareholders, and other stakeholders. Corporate governance provides a structure for development of corporate objectives, facilities to achieve those objectives, and means to supervise corporate performance. Corporate governance mechanisms are critical for company performance. This study examines the internal mechanisms employed by board of directors and their effects on financial performance through strategic planning. It uses a case study of auto companies listed in Tehran Stock Exchange. The role of board of directors in strategic management is determined by their degree of participation in strategic planning. In order to measure the role of board of directors in strategic management, this study used a questionnaire developed based on Hunger-Wheelen and Nadler Models. This questionnaire was distributed to 105 board members of auto companies listed in Tehran Stock Exchange. 75 questionnaires from 78 respondents were included in this study. Financial performance (Tobin's Q) was calculated based on corporate balance sheets. The study findings revealed a significant relation between the role of board of directors in strategic management and financial performance. It means that board of directors with catalyst role, active participation, or nominal participation in strategic management had positive effect on corporate financial performance. Conversely, board of directors with minimal review, rubber stamp, or phantom roles in strategic management had negative effect on corporate financial performance. (Hossein Haji Beigloo, Younes Nazari, Puyan Hoseinpur, Meysam Goudarzi, Ghasem Bakhshanddeh. Corporate Governance: Strategic Role of Board of Directors and Its Effect on Financial Performance Case Study: Auto Companies Listed in Tehran Stock Exchange. J Am Sci 2013;9(7):207-214). (ISSN: 1545-1003). http://www.jofamericanscience.org . 25
Publication Year: 2013
Publication Date: 2013-01-01
Language: en
Type: article
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Cited By Count: 1
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