CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse
"Corporate governance" includes mechanisms to monitor CEO's performance to assure efficient decision adoption and maximize firm value. One of the most effective aspects of firm performance is the degree of risk-taking. This study investigates the relationship between CEO power and ins...
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| Format: | Article |
| Language: | English |
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Iran Finance Association
2022-01-01
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| Series: | Iranian Journal of Finance |
| Subjects: | |
| Online Access: | https://www.ijfifsa.ir/article_139654_28c550f091affa13663510d6baea6bb1.pdf |
| _version_ | 1811322861935132672 |
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| author | Jamshid Bigdelo Neda Bashiri Reza Tehrani Fatemeh Kheilkordi |
| author_facet | Jamshid Bigdelo Neda Bashiri Reza Tehrani Fatemeh Kheilkordi |
| author_sort | Jamshid Bigdelo |
| collection | DOAJ |
| description | "Corporate governance" includes mechanisms to monitor CEO's performance to assure efficient decision adoption and maximize firm value. One of the most effective aspects of firm performance is the degree of risk-taking. This study investigates the relationship between CEO power and institutional ownership with risk-taking behavior of member firms of Tehran Stock Exchange and Iran Fara Bourse during 2010-2019 by utilizing quintile regression. According to the results, by the increase of CEO's power and the company's benefit from powerful managers, the company risk (total risk and systemic risk) will decrease. As a result, managers are eager to safeguard their reputation as expert decision-makers and, as a result, they try to reduce company risk. In addition, the existence of institutional ownership among the shareholders of the company will reduce the risk, which can be referred to in the agency theory. Also, if the impact of these two variables is considered together, the risk will increase significantly. This very fact reflects the exercise of the power and influence of institutional owners. As a result, large shareholders have a supervisory role in the discipline of managers, but despite their impact on the relationship between managers' power and corporate risk, they do not alter the main negative relationship. |
| first_indexed | 2024-04-13T13:43:41Z |
| format | Article |
| id | doaj.art-b17635da52404f00b846fafe65559db6 |
| institution | Directory Open Access Journal |
| issn | 2676-6337 2676-6345 |
| language | English |
| last_indexed | 2024-04-13T13:43:41Z |
| publishDate | 2022-01-01 |
| publisher | Iran Finance Association |
| record_format | Article |
| series | Iranian Journal of Finance |
| spelling | doaj.art-b17635da52404f00b846fafe65559db62022-12-22T02:44:32ZengIran Finance AssociationIranian Journal of Finance2676-63372676-63452022-01-016111714110.30699/ijf.2021.232129.1131139654CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara BourseJamshid Bigdelo0Neda Bashiri1Reza Tehrani2Fatemeh Kheilkordi3MSc. Department of Financial Management, Alborz University, Qazvin, Iran.PhD Candidate, Department of Business Administration, Payam Noor University of Tehran, Tehran, Iran.Prof., Department of Finance, Faculty of Management, University of Tehran, Tehran, Iran.MSc. Department of Science in Economics Planning, Shahroud University of Technology. Tehran, Iran."Corporate governance" includes mechanisms to monitor CEO's performance to assure efficient decision adoption and maximize firm value. One of the most effective aspects of firm performance is the degree of risk-taking. This study investigates the relationship between CEO power and institutional ownership with risk-taking behavior of member firms of Tehran Stock Exchange and Iran Fara Bourse during 2010-2019 by utilizing quintile regression. According to the results, by the increase of CEO's power and the company's benefit from powerful managers, the company risk (total risk and systemic risk) will decrease. As a result, managers are eager to safeguard their reputation as expert decision-makers and, as a result, they try to reduce company risk. In addition, the existence of institutional ownership among the shareholders of the company will reduce the risk, which can be referred to in the agency theory. Also, if the impact of these two variables is considered together, the risk will increase significantly. This very fact reflects the exercise of the power and influence of institutional owners. As a result, large shareholders have a supervisory role in the discipline of managers, but despite their impact on the relationship between managers' power and corporate risk, they do not alter the main negative relationship.https://www.ijfifsa.ir/article_139654_28c550f091affa13663510d6baea6bb1.pdfceo powerinstitutional ownershiprisk-takingexercising influence and power |
| spellingShingle | Jamshid Bigdelo Neda Bashiri Reza Tehrani Fatemeh Kheilkordi CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse Iranian Journal of Finance ceo power institutional ownership risk-taking exercising influence and power |
| title | CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse |
| title_full | CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse |
| title_fullStr | CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse |
| title_full_unstemmed | CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse |
| title_short | CEO Power, Corporate Risk-Taking, and the Role of Institutional Owners: Pieces of Evidence of Tehran Stock Exchange Market and Iran Fara Bourse |
| title_sort | ceo power corporate risk taking and the role of institutional owners pieces of evidence of tehran stock exchange market and iran fara bourse |
| topic | ceo power institutional ownership risk-taking exercising influence and power |
| url | https://www.ijfifsa.ir/article_139654_28c550f091affa13663510d6baea6bb1.pdf |
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