Corporate Governance and Firm Performance in Iran

This study uses data from companies listed in the Tehran Stock Exchange (TSE) for the years 2005-2006 to investigate the role of corporate governance indices on firm performance. We use board size, board independence, board leadership and institutional investors on the board as corporate governance indices and EPS, ROA and ROE as firm performance surrogates. Our regression results show that board size is negatively associated with firm performance. Moreover, the presence of outside directors strengthens the firms' performance. We find, however, no relationship between leadership structure and firm performance. Likewise, the presence of institutional investors on the board of directors is not positively associated with firm performance.